Hello my Investors, Traders and Readers friends. Thank you very much for all the comments and questions sent to me about my two main post yesterday. As usual, the current situation of the world economy and the stock market, generates a lot of anxiety, doubts and questions. I'll try to give my opinion most of these questions in the following 12 points:
1 .- When I say that the market is oversold, I mean who has fallen a lot in very little time or very quickly. If you analyze the main technical Indicators, may confirm this assertion.Obviously, this does not mean that the market can not continue to fall. However, it is reasonable to consider that the market should react and begin to rise.
2 .- However, the nature of this fall has been so important, we might expect the market reaction is only short term. Possibly, within the previous resistance level.
3 .- It is possible to make some trade in this upload? The answer is: probably yes. But be careful. First, this increase would occur only in the short term. Second, it should be given a very high level of volatility. Third, because we are facing a constant barrage of bad news, which may affect the market in the short term.
4 .- I think it is more reasonable than those who already have a long position, to sell during this rise and those looking for short operations, to locate good candidates.
5 .- It is possible that the market fall further? Of course yes. Let us not forget that the S & P downgrade was announced on Friday after the market had closed. And do not forget that we may have some resolution on Sunday on the debt issue in Europe. I think part of the trade in that situation would be very risky. Would only make sense for those who make day trades.
6 .- Traditionally, many investors do not like taking short positions. Many analysts andcommentators who constantly talk about the risks of short operations. I personally think that after the stock market falls of during the years 2000-2003 and 2007-2009,would be much more risky to stay with long positions during those periods.
7 .- The alternative is to time the market out and stay out of it until it begins to rise again, which is not very realistic. In general, there is much profit in those crashes that can be exploited by smart traders.
8 .- In the market there are various companies and people who analyze these alternatives. For example, The Market Trust has a Long-Short Portfolio.
9 .- It is true that the stock market is always looking surprised. It is also true that usually starts to rise when most analysts are with an opinion of the market downward, when the news is negative and when the perception is that the situation can get worse. Surely,on this occasion to pass the same. And it can happen now. However, usually before starting to rise, the market builds a base to support that growth. The construction of thebase takes time and usually comes accompanied by larger falls in prices.
10 .- For this reason is that I am of the opinion that the market may rebound in the shortterm, only to fall again ... and more significant ..
11 .- In this situation, it is vitally important to be very attentive to the next market moves.Surely there were important opportunities ... and we must be there to take them.
12 .- In my particular list of stocks, I have about 75 major short candidates if confirmed my perception of what can happen in the stock market. Watch for that to happen, I will share with you my thoughts on this specifically.
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