Friday, February 27, 2009

Are There Any Bulls Left?

Its seems pretty much all of the bulls have thrown in the towel. It is pretty hard not to. Negative news has been cascading into the market, and the market has been reacting accordingly. Some things to consider though before we give up on stocks:

-The economic outlook is pretty weak, and possibly still weakening, but a lot of it is priced into stocks. The DOW is on the verge of breaking through 7,000, and could go lower, but what positive scenario have traders priced into stocks? That is something to think about moving forward.

-The stock market tends to rebound before the economy does. This is mostly due to the market anticipating future events.

-Bear market rallies are common, even if stocks aren't ready to make a significant move higher. There are opportunities to make money during these periods.

-Although there is virtually no limit how much further stocks can fall, the downside momentum will eventually subside, even though it feels like it may never happen. Try to see both sides of the argument.

Some things to think about as we try to navigate this market.

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