Moving averages of the major indexes were broken to the downside 10 days ago leading to big selling. The selling has only increased as we head lower. Currently we are seeing major distribution as concern increases over government debt. World markets are all heading down as concern increases about another possible recession. Don’t try and guess just follow the averages.
Readers should all be in cash and awaiting the next follow through day. Follow through days are important since they help avoid getting sucked in on the very next big up day. Remember the biggest up days happen in down trends so don’t get sucked in. The time to buy is when we see a high volume up day at least 4 days off the low followed by consolidation before another up day. That is the follow through day and don’t buy until you see that.
Ignore the pundits that say stocks are cheap, stay on the side lines and be glad to be in cash.
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