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Wednesday, December 10, 2008

I'm Giving Her All She's Got, Captain!

"Ya kinnae change the laws of physics Captain!" - Mr. Scott

As I mentioned in this mornings podcast? I'm not too excited at what some are terming 'the bottom' in the stock market. The Bottom? We will know what the bottom in the stock market was, during this recession five years after the fact. We can all talk at that time, about the bottom, and we can discuss how it was extremely obvious it was to all of us, that it was 'the bottom'.

Now I'm a bull. I love buying stocks. I love holding great DRIP dividend stocks. But I'm not an idiot. We cannot know today, where that bottom will be and it is foolish to attempt to 'catch it'. It simply be throwing good money after bad.

There's only one thing that will sell me on the development of what I would call a developing 'relief rally'.

Price. Price makes profit. Which at this point? We do not have. Look at the following chart:

The DOW closed at around 8,761.

Until we are consistently trading after the open (no 'sucker fades' thank you very much), in the 9,100 range? I don't see a confirmation on the bottom rally. Mind you, if we do trade well into that range? Yes, I may take a nibble into the stock market.

We may have promises of infrastructure growth and development? We may have promises of expanded Federal Reserve powers? The auto companies may survive? They may talk about further interest rate cuts?

But we're not out of the woods yet Mr. Scott.

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Note: This is not an investment or trading recommendation. The losses in trading can be very real, and depending on the investment vehicle, can exceed your initial investment. I am not a licensed trading or investment adviser, or financial planner. But I do have 12 years of experience in trading and investing in these markets. The Challenge accounts are run for the education of other traders who should make their own decisions based off their own research, and tolerance for risk.

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