My November notes still apply...:)
things to watch especially during the next few weeks:
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TRIN index: shows results of ratios of stocks that advance vs decline and the associated ratio of the volume up and down then plots that on a graph. The bears are about to win out which should show up in a further market decline; This will present some buying opportunities as early as today; My guess is still it will reach the bottom on Friday this week but it could stretch out for several weeks. It can give you a heads up when to buy or sell at or about the highs and lows of market sentiment. Here is where you can see the TRIN chart and explanation:
CHART: http://stockcharts.com/h-sc/ui you can customize; note the MACD high for August when the mkt. dropped and the same pattern has just taken place in November.
Use Yahoo Beta Graphs and add the Bollinger Bands to see the likely range of prices during the day. You can see Alerts for getting emails when you want to buy or sell. When you are ready, use this to set a Limit Order for a price that is a little BELOW the lower Bollinger Band and/ or the 200 Day moving average (check that price for 1year, 6mos., 1mos, and 5day periods).
1. Buy only those stocks, ETFs or Mutual Funds showing long term up trends (5yr of history) and with these additional criteria (for stocks and ETFs). That way if the market really goes south, the economy really gets into a recession, you will make out ok. For mutual funds you need substantial global exposure since it may give you a cushion against the continuing dollar exchange rate decline against other currencies.
2. Pick countries where PE ratios are low (see article:http://www.marketoracle.co.uk/Article2815.html) and their currency is strong against the dollar.
3. Pick sectors on the rise such as, argricultural commodites, basic and precious metals, industries that service the oil, gas, green, alternative energy markets, India, Brazil, Russia.....watch for these being part of your mutual fund Top Ten profolio investments.
4. PE ratio less than that industry average or less than 20:1. Price / Sales is even a better measure.
5. Good return on equity numbers (use Google, Yahoo Finance or see Reuters stock analyses.)
5a. Yahoo Finance has a Compare with Competitors page that shows comparable ratios - very helpful.
6. Good Cash Flow from operations numbers
7. Beta sensitivity number under 2 and preferrably around 1 - 1.50
8. Set Limit order price, Below X $ about 10% below current or about the October low so when the market stabilizes, you already have a 5% plus capitacl gains.
9. consider a small portion of your portfolio in Double Inverse EFT related to the dollar(FXI, UDN), so when our idiot Bush Administration continues to talk about a strong dollar but practises benign neglect in letting it fall against many of the world currencies (EURO, YUAN, YEN) then you will have something going UP. CAUSE, this will be a very short term investment that you will have to follow daily and setup a SELL order when it rises 15-20%.
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