Online Stock Trading | We Are Severely Overbought and the Global Slowdown is Beginning to Show its Face

We Are Severely Overbought and the Global Slowdown is Beginning to Show its Face


Filed Under Market Commentary |

As the Global Economy deteriorates further we’ll continue to see the commodity bubble burst and equity markets that are volatile.  At the moment Crude Oil has temporarily lifted the spirits of traders and helped stocks push higher.  The markets have moved into extreme overbought conditions and should continue to see more downside ahead.  There is simply too much “we have bottomed” in the market for us to actually have a bottom.  Bottoms are formed when the crowd gives up or as the street calls “capitulation.”  The sad piece, we haven’t seen it yet.  We are seeing an unmatched Global Slowdown with the Eurozone and Japan headed for negative GDP/Recession.  China’s and India’s stock exchanges are flashing signals there is a slowdown ahead.  Our markets have yet to assess the impact of the Global Economy as well as more mortgage troubles for Banks.  This market will continue to suck in those who feel we have bottomed and destroy their capital.

I am simply keeping a high level of cash and taking baby steps into very few stocks.  In How to Make Money in Stocks by William O’Neil history has shown bear markets, like this one we are in that last longer than 6 months it takes a minimum of two years before a new roaring bull market emerges.  That is an astounding piece of information, history is so important when looking at the markets.  Sadly, many will not know this bit of information and will try to fight the trend.  This is why many do not make money in the market and is why a majority of fund managers underperform the S&P500.

Heroes are for comic books, not the stock market.  Preserve your capital for brighter days, which will come but will take some time.

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