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Old 08-30-2008, 12:04 AM   #1 (permalink)
 
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Post Analyze the broader markets

Every day or so, analyze daily and weekly charts of the Dow• Jones Industrial Average (DJIA), the S&P 500 (SPX), and the Nasdaq 100 Index (NDX) or Composite (COMP). If your charting source doesn't list these indexes, use the DIA for the Dow, Spy for the S&P 500, and QQQ for the Nasdaq 100 Index. Check out the overall picture of each. How is Mother Market feeling? As I've said before, "When Mama aren’t happy, aren’t nobody happy." Conversely, when her exchanges feel perky, she can give generously of her wealth. Look at the broad index charts the same way you would a stock chart. Are they in up trends, downtrends, or moving sideways in Stage One or Stage Three modes? Where is support and resistance? Are they overextended? Overbought? Oversold?

Correlate major market trends with your buy/sell decisions. If you're long a leading Nasdaq tech stock, and the Nasdaq 100 just reached into overextended, overbought territory, then take profits! Ifyou're long a big bank stock and the Dow also teeters precariously high, and then grab your gains. Many times, financial stocks lead the Dow higher or lower.

Also, monitor other indexes for possible market tops and bottoms. Say the oil index (XOI) sits at a major low, on support. (Oil is a commodity, remember?) Betcha my duck slippers that the broader stock indexes hover at their highs. (If oil prices dip to lows, then stock prices may be toppy.) Wouldn't it be a cool move to grab your gains and get a good seat on the sidelines? Then you can watch all the yelling and arm waving, as market players who weren't as savvy as you scramble for any exit they can find!
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Old 10-05-2008, 02:06 AM   #2 (permalink)
 
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Old 12-30-2008, 12:33 PM   #3 (permalink)
 
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