Is The Selloff Over? Asks Timer Frank Kollar
August 3, 2007 (FinancialWire) (By Frank Kollar)
The second triple digit advance for the Dow Jones Industrials (DJIA) in as many days has many asking if this is the end of the decline and the beginning of a new advance. What happens next?
There are many positive signs that the fast and furious decline may very well have done most of the damage and relieved the overbought conditions of the stock market. The Volatility Index (VIX) has reached highs not seen since 2006. Typically a high VIX reading, an indicator of fear in the market, leads to higher highs.
The S&P 500 Index (SPX) reached the 200-day moving average. Quite a feat in only two weeks of declines. But when it reached that well recognized support line, it rallied and closed the day with a huge gain.
We may have seen the bottom, but if you take long positions, use sell stops at the lows to protect against the possibility that the market will fool everyone and continue lower.
Kollar’s research has shown that the financial markets are in tradable trends approximately 80 percent of the time. FibTimer strategies define trends and trade them in both advancing and declining markets. Caring nothing about what newscasters say or what the latest economic indicator predicts, trends are where the profits are, and that is where FibTimer is.
Kollar is editor and chief analyst at FibTimer.com (http://www.fibtimer.com) which offers market timing strategies for S&P and Nasdaq index fund traders, as well as bond, gold, small cap, sector, ETF and stock trading strategies.
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