Friday, September 14, 2007

Has The Market Bottomed?



Back in July when the stock market was selling off, I posted the above chart of the S&P and the VIX. What I had noticed is that market bottoms have coincided with VIX readings above 16.

As you can see in the above chart, the vix got as high as 30 which to me was a very bullish reading. High VIX readings indicate fear and when you have fear taking place in a bull market, that is always a great time to buy as long as the trend is still in tact.

Notice in the above chart the 70 week moving average which has supported all declines over the past 3 years. A few weeks ago the S&P tested this average and rallied strongly.

I am long the market but unfortunately I didn't buy at the average. Trying to pick the exact bottom could be painful although buying at the average would have worked out amazingly well. I bought about a week later after I saw some buying come into the market.

I didn't buy the S&P but I did buy the NASDAQ and EEM. These two markets are stronger than the S&P and I always try to position myself in the strongest markets.

If I'm right about the market, I think we'll see the NASDAQ and EEM (along with other world markets) make new highs for the year.

4 comments:

BONITO said...

good to have you back

Barbara said...

Welcome back, you were missed.

Kevin said...

Thanks

Banker said...

Any thoughts on the Fed Tuesday ?

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