Another Day, Another Sell Off Says Market Timer Frank Kollar
November 9, 2007 (FinancialWire) (By Frank Kollar)
Another 360 Dow points down on Wednesday, November 7th. These triple point Dow declines are becoming commonplace and so far, have been followed by next day rallies. But this time it may be different.
Wednesday’s decline was followed by a huge sell off in the Nasdaq Composite Index (COMPQ) and the Nasdaq 100 Index (NDX) on Thursday. These two indexes have been the market leaders in the three-month rally leading to this newest sell off. A follow through decline in the Nasdaq is telling traders that we may be in for the real thing this time, meaning lower lows in the weeks ahead.
There are more clues. The S&P 500 Index (SPX) closed below its 200 day moving average. This is the bull market / bear market support line for many longer-term oriented technical analysts. Also, Thursday’s Nasdaq decline of 52+ points puts the tech heavy index below its 50-day moving average. Not as bad as the SPX, but technically a bearish indicator.
Add to this Fed Chief Bernanke’s testimony forecasting substantially weaker growth and an increase in inflationary pressures, and you have all the ingredients for a substantial correction.
Traders and market timers need to follow their trading strategies regardless of the news. That way if the market rebounds again, their strategy will either keep them in or get them back into, the correct trend. It is never a good time to trade on news events. Volatility is what makes strategies work in the long run. But we must admit, this time we may be in for more selling in coming weeks.
Stay tuned.
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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