January 2nd, 2009

What to Look Forward as the New Year Begins

Just turned on CNBC and began seeing all the historic events of 2008 flash before my eyes in :13-minute segments. Whatever you might think about CNBC as a source of actionable information for investors, it might be the visual equivalent of “All the Business News That’s Fit to See”. Seeing all the anxious and painful moments we watched over a grueling 12 months compressed into an hour or so brings into sharp focus how difficult maintaining your balance and composure during those times actually actually was. My hats off to the editors …. and is a DVD copy of that show available for posterity.

My wife and I (plus our dog) have settled in our winter home base (through the end of March) and I now look forward to getting back to the stock market on a regular basis again. And what do I see now? No question about it, we’re at a critical juncture not too dissimilar from December 2007 and August, 2008. What I’m referring to is the fact that the Index and the 60-day MA have converged:

In both of those previous instances, the market failed the test of penetrating the first hurdle to recovery and the Bear Market continued. The market looked like a bottom looked possible only in April when both the 60-day and 90-day MAs were crossed and a 2 day cross was made of the crucial 180-day MA (according to the MTI, neither a cross of the 60-or 90- warrant an “all-clear” signal, only the 180-day). So while the Index may actually cross the 60- and 90-day MAs now, as I think it will, caution is still warranted.

Having said that, there are signs of optimism. The supporting trendline that serves as the neckline of the massive double top I wrote about on November 19 seems to have held – so far.

The “Golden Cross” stock list has expanded again and as of the last close includes 228 stocks, 25% more than when the Index was at this level on December 17. Many of the stocks on the list include those on the IBD 100 list, are among stocks with positive relative strength and stocks with momentum. Nearly 30% of the Golden Cross stocks are regional banks; 16% are drug, biotech and healthcare stocks. [Again, if you’re interested in the list, write me at guru at stock-chartist.com]

By the way, I’m thinking of adding a weekend stock chart analysis video to be posted on Sundays. Any interest?

Glad to be back and happy investing and prosperous 2009 to all.

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