We have a
new SELL signal for the NYSE Composite Index effective today.
It looks like the
market has finally run out of steam. We issued a BUY signal on 9/2/03
following a SELL signal on 8/6/03. With the exception of that brief SELL
signal, the market has been going up for a full year.
We read that
this one-year rally without a 5.0% correction was the 12th longest in
other such rallies have averaged about 10.0%. However, in only
one case, 1961 to 1962, did the correction lead directly to a bear
In the other
cases, the market recovered, staged a new rally, and hit new highs before the
bull market finally ended.
So what do we
have to look forward to now? Will the market recover and reach new highs,
or will the bear market return?
No one knows, but
the odds favor a short-term correction. The real question is "What
follows the correction?"
Oil prices are at
historical highs, primarily because of the weak dollar. Offsetting this
are the low interest rates that continue to fall in spite of the improving
economy. Employment remains weak. Bankruptcies are on the rise as
are dept levels in general. Normally Presidential election years are good
for the stock market. However, this year deficit spending has reached a
point where even the politicians may be forced to tighten the budget in spite
of it being an election year.
Can the economy
keep on growing? Will enough people buy stocks already priced at a
premium to drive the market higher? We'll have to wait and see.
As Yogi Berra
said, "You can observe a lot by watching". That's what
I'll be doing. If the market decides to stop moving down and resume
moving up, I'll let you know by issuing a new BUY signal.
not what you earn; it's what you keep the matters.
Investing in the stock market involves risk. You can lose part or all of your
money investing in the stock market. Investment decisions are the
responsibility of individual investors. We do not recommend using these BUY or
SELL signals alone for timing your personal investments. These signals should
be used as only one of many criteria for making personal investment decisions.
We make no warranties or claims concerning the investment results you will
experience should you choose to follow these BUY or SELL signals. We publish
past BUY and SELL signals along with movement in the New York Stock Exchange
Composite Index between signals. Past performance is no guaranty of future