For one thing, the Dow was down almost 20% to 11,500 and change from it's 52 week high of 14,280. Some would consider that oversold. The market pendulum often swings farther than we think it should, and that includes to the upside.
It's always a bummer when you make a prediction, like there will be more bad economic news, and then make a market bet based on your prediction, your prediction comes true, but the market moves in the opposite direction. Sort of like completing a pass for minus yards. How many people have bought a stock thinking there would be a big upside earnings surprise, which actually happens, but the stock price goes down on the news. Here is another, someone buys a stock thinking the company is ripe for a buyout, and it happens, but the buyout is for less than the current stock price. That is why I almost never make investment decisions based on predictions, certainly not my own predictions. I can't tell you how many times I have been right and lost money. Some how I have never been wrong and made money.
How many people have bought a stock thinking there would be a big upside earnings surprise, which actually happens, but the stock price goes down on the news. Here is another, someone buys a stock thinking the company is ripe for a buyout, and it happens, but the buyout is for less than the current stock price. =====================
Ain't that the truth. So how one should play this market then? Just based on fundamental & ignore all the news, charts & signals?
This appears to be a typical Bear Market rally. However, today was the first Friday where the market hasn't sold off. That is a very good sign. I'm not sure if we're going to 13,000 on the DOW but another 100 points up wouldnt' suprise me either!! WE should get a retrace of the recent Panic low within 6 weeks of it occurring. That would be somewhere in the late February/early March time period. Nasdaq and Russell 2000 already fell into Bear Territory. DIA and SPY should follow. Don't get fooled by the current rally. WE have to AT LEAST do a RETEST!!
Stocks don't go up, or down forever....they wiggle. Check the charts for DIA. The 6 moth daily shows a swing point on 1/22 with huge volume. The stock bounced this day, had a large range in price for the day compared to previous days, and closed with positive momemtum. The next day tested the low of 1/22 and failed. It again had a large price range and closed near the high for that day. This was a clear buy signal.
I think we're in a counter-trend bounce that will go to about $130, and then resume to the bearish direction.
Watch the swing points, and volume. They talk to you.