Stock Market Has No Reason to Rally Says Market Timer Frank Kollar

January 23, 2009 (FinancialWire) (By Frank Kollar)

The stock market added to its weekly losses with another scary selloff on Thursday. The S&P 500 Index (SPX) dropped 1.5% and the Nasdaq Composite Index (COMPQ) lost almost 3%. These numbers were actually much better than the midday lows.

The advance from last November’s bear market lows is history as support levels continue to break down. The 800 level for the SPX looks likely to be tested in coming days.

The question though is; why should the stock market rally? The economic news continues to worsen; earnings reports are adding more fuel to sellers as even Microsoft, the picture perfect company, announced 5000 layoffs, the first major round of layoffs in 30 years.

Typically the stock market looks nine months ahead. Thus market rallies usually start in the midst of a downturn. But what if the economic woes still have several years of bad news ahead?

There is no reason to invest. There is no reason to commit funds that have already been devastated by 40% losses in 2008 and now an additional 8% of losses in 2009. With the November bear market lows approaching, who will step up to the plate and risk what is left of their investing capital?

There is a new bull market out there somewhere, but so far no reason to expect it to begin any time soon.

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.

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.

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