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Are we at the bottom?

It seems like the market is bottoming. Even an unexperienced investor can feel that there is a resistance line and the market is not willing to go down any more. It can be misleading however. Take a look at the chart showing  recent moves in the stock market.

Dow Jones

The first red resistance line was what I considered a bottom line in July 2008. Since then the market was growing as well. Then it failed in rally, when in September it tested this line twice and at the end of the month it failed and dropped down like a rock. This all can happen again.

However the market doesn’t respond to bad news about weak economy, losing consumer confidence, bad retail and factory results, decreasing GDP, and unemployment negatively with another drops. It tends to grow as the chart shows. Last three days the market was growing and if the trend remains we may get into new rally.

I consider this development as a “Rally Attempt” and I am changing the market status into a Rally Attempt status.

What does it mean for RSS investors? I still strongly recommend NOT buying any new positions. Even if the screener shows new stocks, I add them to a watch list as potential stock to buy and if the screener shows those stocks again when the market will be ready I will buy. Until then I am sitting tight, saving money and wait.


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