The good news is the broader market indices such as the SP500, NYSE Composite, the Nasdaq 100, and many others broader gauge of the equities market did not make a new closing low as they did back in November 20, 2008. Furthermore, many market breath indicators did not drop to their November 20, 2008 level. All these are signs that the internal market has bottomed. This does not mean the bear market has ended because the bull & bear market is based on the DJI, not on the broad market indices. Go back to a post I made last year to read what I have described will happen during a market bottoming process and you can see it being played out right now.
Today's new DJI closing low is a turning point for the market. It caused the market to go from totally bearish to cautiously bullish. This change in market sentiment will cause some smart money to start nibbling on those depressed value stocks. And for me, I too will start monitoring those stocks I consider as value stocks for buying opportunities to add them to my retirement account. My list will primary consist of companies that are the industry leaders in their respective market/business and that have consistently delivered solid past performance, and operate with a solid business model. As for my trading, I will start leaning toward making more long trades than short trades as the market make its transition from bearish to bullish.
Here is a caveat. If these broader market indices fall back in line with the DJI by making new low, then the market is back to the state as it was yesterday...bearish. Until the market say all coast are cleared, I will maintain a cautious bullish sentiment and trade with a small bullish bias.
Here are the updated charts for reference. There are good news and bad news to be read from them. They don't look as bad as they seem. The market is saying it is turning around. Pay close attention to the next DJI new low.
