Sideways Action

Dow Jones index and most other indexes have all been trading sideways for 3-4 months depending on the index.  A 16 week wait can drive people crazy and this is not the time to be buying stock. We have to wait and see the next move of the markets. Interest rates continue to stay low indicating weakness in the economy.  Indeed GDP is not robust as can be found in the latest figures. Post recession the unemployment rate is still stubbornly high. None of these actions should be occurring in a post recession environment suggesting we need to be careful.  The chart below shows the action as discussed courtesy of www.bigcharts.com

All that can be done here is to continue keeping a list of stocks with great earnings and revenue that hold well regardless of a weak market. When the market does turn up this list of stocks will be the first to take off and we should be ready for it. My suggestion is update your lists once and week and wait for that follow through day in the market before buying. We have no idea when we break this sideways action or whether it will be to the upside or downside. Don’t follow the forecasters unless you want to get broke. Yes the economy is weak but the stock market has a habit of turning up when things look their bleakest. Remain on the sidelines and wait for a breakout to the upside. Of course a break to the downside means we have even longer to wait.

Remember this blog site is not a newsletter that promotes stock tips or penny stocks. Rather the idea is to teach stock selection with low risk advice.