This is a very resilient market. A week ago it looked like it was over bought and bearish signs were flashing. Now it seems like there are bullish signals showing. So what is an investor to do? Stay on the side line or invest?
That’s not the right question though. The right question is why is the market acting like it is? That answer is a little bit more difficult to answer isn’t it. There could a hundred reasons why investors are feeling more optimistic. So let’s focus on what we do know. The market is volatile right now – there’s no telling if a week from now it will have switched from going up to going down again.
Volatility can be good and bad but in this case because of the amount of volatility that’s affecting the overall markets — my recommendation is to stay on the sideline at least until we know which direction the market is headed.
How will we know when and where the market is headed?
One of the main indexes that I watch is the QQQQ, which is the top 100 Nasdaq stocks. Since the late July (July 25 / 26) it’s hovered around $40 (between a high of $40.20 and a low of $38.50). If the QQQQ breaks past either of these numbers then we’ll have a better idea of which direction it may head.
Same can be applied to other indexes such as DJIA, or S&P 500.
For now keep watching and if it seems the market has finally decided which direction to move I’ll make our recommendation on some stocks.
Stay tuned!
