Saturday
Feb212009
The Stock Market: What Next?
Saturday, February 21, 2009 at 11:17PM
I'm taking a rest from
system development for a while. It almost seems
pointless given the current market conditions.
I won't be deploying a trading system with real money for quite some time given the current market conditions. Instead I'll observe out of sample performance for my current trading systems and more importantly the underlying ranking systems. After all, the ranking system is the heart of Portfolio123 stock trading systems.
I don't often provide technical analysis on this web-site, simply because it is difficult to get it right. But I thought that I would try my hand at TA while I am sitting on the sidelines. The chart above shows the historical DJIA index back to 1995. As you can see the DJIA is at a major support level. It it breaks down from here (to ~7000) then look out. It will go down fast to who knows where. There are no support levels for a long way down. More likely, some big players will jump at this major support level and drive the DJIA up to the 9000 level. From there I would not be surprised to see a gradual decline back down and possibly through the current support level, probably this summer or fall.
This post should not be taken as financial advice. The commentary is provided only for educational purposes.
I won't be deploying a trading system with real money for quite some time given the current market conditions. Instead I'll observe out of sample performance for my current trading systems and more importantly the underlying ranking systems. After all, the ranking system is the heart of Portfolio123 stock trading systems.
I don't often provide technical analysis on this web-site, simply because it is difficult to get it right. But I thought that I would try my hand at TA while I am sitting on the sidelines. The chart above shows the historical DJIA index back to 1995. As you can see the DJIA is at a major support level. It it breaks down from here (to ~7000) then look out. It will go down fast to who knows where. There are no support levels for a long way down. More likely, some big players will jump at this major support level and drive the DJIA up to the 9000 level. From there I would not be surprised to see a gradual decline back down and possibly through the current support level, probably this summer or fall.
This post should not be taken as financial advice. The commentary is provided only for educational purposes.
Have a good weekend,
Steve
Reader Comments (7)
I would recommend you think about long/short combinations, such as in this P123 post: http://www.portfolio123.com/mvnforum/viewthread?thread=3096#14420
Otherwise, now is a good time for a break as government actions will render normal conditions models futile. I agree that we are going lower after on pop on the "bank rescue". Consumer demand is circling the drain...
Thanks Shaun - I think we have sprung a leak. Perhaps we need to say our prayers.
I am not able to short stocks so the best I can do is ETFs that short the market. In any case, I have a tendency to do the wrong thing so best thing is to stay out of the markets until the smoke clears. Better having zero profits than wiping out my account.
I agree with that... when in doubt, stay out. This is a period of unprecedented volatility and cash will endure, especially in this deflationary environment.
Keep an eye on the jobless claims numbers on Thursday along with advanced retail sales and business inventories. Friday's trade balance and Import Price Index are important too.
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