*Note: This was written by a Yahoo! contributor. Do you have a story that you'd like to share? Sign up with the Yahoo! Contributor Network to start publishing your own finance articles.
COMMENTARY | According to financial technicians who study the stock market, the S&P 500's 50-day moving average finally broke its 200-day moving average. Technicians call this a "golden cross."
I'm now more confident that we are going to have a tremendous stock market rally this year. I'm moving more money out of bonds and into stocks.
In my years of studying the stock market, I've found it pays to respect the signs.
Shaeffers Investment Research found that 16 of the 17 golden crosses meant positive returns for the S&P since 1975. The stellar returns translate into a 13 percent median gain for the year following one of these golden crosses.
We are now back in bull territory. It's time to bring out the champagne glasses.
For amusement, I also like to read about other signs that the stock market will or won't do well.
According to the Chinese Zodiac, we are in the Year of the Dragon, which is a historically good year for stocks.
I know it's foolish to look at astrological predictions about the stock market, but it's entertaining. The fact that it is an election year should affect stocks as well.
A friend of mine asked if that means it's "too late" to invest in the stock market.
I found that concern rather interesting since many stocks are at obscenely low prices.
As a mother with two teenage sons, I'm excited that my sons have the chance to buy shares in many companies at discount prices.
I have trained my sons to dollar-cost average into the stock market by buying about $1,000 worth of shares in a particular company and then returning to buy more shares in about a year. If they had more money, I'd encourage them to invest each month.
I also teach them to diversify their portfolio by holdings a wide range of stocks. With $10,000, they own 10 different stocks or mutual funds that represent different sectors.
I don't teach my son about the astrological predictions about the stock market. Because if they are doing the right thing and investing for the long term in quality companies, it doesn't matter if it's the Year of the Dragon or the Year of the Monkey. They will do well.
5 comments