Stocks carry over their strength from Monday, as expected, with the Dow up nearly 100 points today. We expected the bounce to last a few days, but the question is, is this a tradable bounce where we can put more money to work in UPRO, TEX, FWLT, FCX, and WLL. While these stocks have definitely come down to cheap levels, in ” The Mission”, we are trying to be serious about the stocks we own. That means, sometimes, that the only work to do – is to do nothing. Especially when we are now in one of two camps – a bull market gradually on its’ way to recovery and buy the dips or, a longer term bear market with deceiving rallies. We could try some fancy strategies here, like buying 7$ June 16 calls on BAC, which are cheap but, then again, right up against the 200 day moving average. Good for a trade and a fortuitous bounce, but I think the best thing to do is to continue to wait for clarity. Keep the black powder dry. Your thoughts?
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So what kind of signal(s), major and minor, will you be looking for that will let you know this is a bull market? And is it true that those bullish signals could also be deceiving (short term)?
For one, our unemployment numbers need to get better, even though they are not getting worse. Europe needs to stop crying and find a way to once and for all make a decision- even if that means sacrificing some things. The market can rally without Europe, we did all year, but remeber that while not growing anything like developing countries, they have a larger economic base GDP % than China, for example. We also need technical indicators to improve- like the major moving averages, volume, and breadth indicators- since that is all the market seems to trade on anyways!