Time to be very careful

[Finance Globe]

Short term, the stock market hasn't been this overbought for over 2 years! A sharp pullback can happen at any time, despite all the hype and greed we're hearing all over the media. If anybody follows technical charts, you will know what I mean. The RSI on most daily charts for popular stocks are between 70 and 90. 75 in general is normally a top until it unwinds. Sure, we can go up for another week or so, but it's very unlikely that we keep doing it from this level.

The problem is now that it seems that everyone is bullish, and people are really letting their guard down.

We have junk flying, like FNM, AIG, Palm, etc. This is usually a final pump of trash before a bigger fall.

Disclaimer: I'm not making professional suggestions or giving advice. Check with your broker or financial adviser for financial advice.

Mike

[Finance Globe]

Update: We have not seen this level of overbought prices (short term) since 1999. The last time that happened, we did sell off quickly (remember the tech bubble?). As I said, anything can happen, we can continue flying upwards, but the more likely scenario is that we pull back and stall out a little while before resuming upwards. On top of that, the jobs number was not that great. In reality, we need to add 300,000 jobs for the next 4-5 years just to bring our unemployment index back to normal.

Just be careful!

[Meya]

Thanks for the information!

[Finance Globe]

No problem Meya.

The trend is still probably up, however selling can be seen as good when the market is so overbought like it is now, and it should be welcomed to longer term investors (it's like a rubber band, you can only stretch it so far before it comes back). However, bears have gotten beat up so badly over the last 14 months, they're likely to choke during any sell off, and drive prices back up. I would still be a student and watch during this time, until things go from overbought to near oversold at least.

Mike

[Wanderer]

FG - mining is the ticket if you can ride the ups and downs (risky)... I hold a company that owns utilities, railroads, mines, cement plants, construction companies (road/utilities) and the like with electric generation and so on. They split three for one so I sold them (made a killing) and I went back when they were a low priced stock and bought them back. They are going great guns... food for thought and as always "...CAUTION..." timing is everything.

Considering precious metals (always dangerous as an investment - very volatile) because there are six mining companies drilling, boring and exploring northern Minnesota for metals such as: gold, silver, paladium, copper, nickel and other non-ferrious metals (they have found all of these non-ferrous metals in northern Minnesota).

In today's world mining companies are able to extract the metals from rock that in the past the technology didn't allow for it. The northeastern (arrowhead) part of northern Minnesota is mineral rich when using new technologies.

Looking at the geological formation of the earth and the State of Minnesota, there is a lighting bolt that contains many minerals and the oldest mountain range in the world is said to be the northshore of Minnesota (eroded due to time) facing Lake Superior. Lots of geological activities and minerals trapped therein.

As a note, I view investing like going to the casino (set aside a fixed amount of money that I can afford to loose) and if I make some money great and if I lose some well life goes on but, the bills are still paid. It is not for everyone and if you use professional advisors/stockbrokers and load mutual funds expect to see your net earnings decrease as there are expenses with their services. I do my own investing and I take the risks and I make the money (made money since I do it myself). Food for thought..."

[Finance Globe]

Investing in this market is riskier than most people imagine. The ups have been really nice over the past year, and the common investor has missed it, thinking it was to easy to make money. Now, you are having them coming back in, which in my opinion is very very late. There may be more room to the upside, but there is the risk of a double dip recession, and a rally of 60% or so that has already been missed. I think that all depends on inflation cycles... And I am not saying to not invest, but just be wary of signs and overbought conditions. There's nothing worse than investing at peaks, or being a bagholder! I also recommend to learn about using protective stops to limit downside risk.

It is like educated gambling for most people. Trading on the other hand is like card counting in poker. Your odds are much higher if you know how to read charts, or just stick with ETF's

Wanderer, I do like the miners like HMY and industrial companies like CAT. I think construction will benefit from the stimulus program.

Look at financial's today, everyone was screaming how undervalued they are just the other day. Nearly all the big names are down 5% just today like Citi, Bank of America, JP Morgan, etc... That story isn't lining up for me. In my opinion, stay away from the risk in a bad economy. Fundamentals 101...

I'm not an expert by any means, but I do know a little about the technical perspectives of the markets. And they are saying be very careful. I don't know if now is the time to liquidate long term investments, probably not, but it is also probably not time not to be a new investor, or to build a new portfolio with fresh capital.

Mike

[Finance Globe]

It does appear that we have panic selling today. Goldman Sachs is down nearly 13%, Google down over 6%. These are some of the big leaders, those are the ones to give us hints about the rest of the market.

Careful, careful!

[belle]

So Warren Buffett's famous quotation doesn't apply during this time?

"...be fearful when others are greedy; be greedy only when others are fearful."

[Finance Globe]

Yes be fearful.

Once again, the market is back to overbought, reiterating all of the above posts.

[Finance Globe]

And the choppiness continues. To a normal investor, this type of behavior normally forces selling at a loss. It's confusing and that is what makes it dangerous. During these times, it is usually best to be patient instead of jumping in with both feet.

Today the big news is again, you guessed it... Goldman Sachs (GS). It was down more than 10% a little while ago. I hate the headlines, like it caught everyone off guard. Did everyone think this would be over in a couple of days? Of course not... Just another market trap.

If you must put your hard earned money in the markets right now, index funds and utilities are probably the safest, such as AT&T, or SSO. Right now however, I'm in all cash and will be eying the 1188 and 1140-1150 levels of the S&P. If I do buy, I will use stops not too far below those levels.

Mike

[hanna]

According to Howard Gold, "conflicts of interests are business as usual on Wall Street and have been for years." So, are investors set up to fail if this is really the case? I'm not sure what to believe from the news. It's frustrating and a wee bit scary to be putting money on some things and later realizing that they were worthless assets.

[Finance Globe]

Investors are always exposed to risk, managing it is key.

[Finance Globe]

A close on the S&P above 1175 may be a buy signal.

[Finance Globe]

A close on the S&P above 1175 may be a buy signal.

And it gets scarier and scarier every day looking at a (long) portfolio... I expect a strong bounce fueled by short covering from late Thursday into Friday. 1140-1150 seems to want to come in on the S&P, or a fake to 1135 and then a rally.

I do believe that Europe will have a strong impact, and have some heavy contagious effects to the world economy. But it will eventually be ignored until it bites us. Do I think the top is in? It's possible, but I also think that the bulls are on a very brief vacation, just long enough to trap the late shorts in the markets. In other words, I do not think that the top is in for this year.

My beliefs anyway...

[Finance Globe]

Today the DOW was down 999 points. This could mark a turn of the markets in a big way. Even if it was an error, things like this will loose confidence for investors of all kinds!