I admit that I occasionally shake the Magic 8 ball like a teenager but, when it comes to investing I like to rely on charts and tried and true methods of determining the outcome and direction that the market will take.
In my opinion, we are in the late stages of a bear market. I'm starting to see a sharp increase in Utilities, Oil, and energy these three being the biggest movers. Also an increase in Real Estate Investment Trusts (REITS). Not surprising is a downward trend in Retail, Auto, and Leisure Products. These are all indications of a late bear stage in the cycle and the bottom of a trough.
Another good indicator of a stock market trend is to look at a moving average of the Dow Jones and check the price and volume. Over the past year the Dow declined steadily with it's sharpest drop occurring in the last week of September and the first week of October. The Volume during these two weeks nearly doubled as investors scrambled to pull out of the markets and stuff what was left of their holdings into safe keeping. The heaviest volume was trading at 2,344,911,100 compared to 778,840,100 in the first week of September. Over the past week the market has been trending up in light volume of 472,561,500 as investors are looking at bargain sale prices and are coming back into play.
"Magic 8 ball does my true love, love me back....Oh sorry," Does this all mean we are ready for a bull run? Maybe, keep an eye on the Dow Jones average. look for a sharp increase in Volume and Price change. I think it could still be choppy for a while yet but, I'm looking for the bull to be let out of the pen in the not too distant future.
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