Saturday, March 31, 2007

The Market Can't Make Up Its Mind

OK, this week was down, and the weekly MACD indicator is still saying the trend is downward. I'm still hearing the market should be choppy for a while longer, and is likely to revisit the recent lows if not break them.

However, now we are entering a seasonally strong week and month, if historical norms are believed. After the recent selling, a short-term bounce seems likely.

Stocks with strong earnings should come out of this OK. In fact, Louis Navellier, who runs top-rated advisories such as the Blue Chip Growth newsletter, says that as far as his stocks are concerned, if you sold some, you should be fully invested by April 6, before the latest quarterly earnings reports start coming out in earnest.

For those who want to be more active, the market signals are pretty mixed, as they were last week. One possible approach is to buy strong stocks and simultaneously short weak stocks. There are many possible criteria (screens) for selecting each group. Lately I've been trying out the VectorVest service, and it looks pretty good. They have a number of different preselected screens.

Eventually the market will break out one way or the other, and establish a new definite trend. But that time is not yet, so position accordingly.

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