Monday, September 10th, 2007
When does the market have enough momentum to jump in?
I’ve never been a buy-on-dips person.
I like to see the market displaying upward momentum, which hopefully lasts, before buying.
So when is there enough momentum to jump in after a market correction?
I look for:
- Momentum or growth stocks beginning to break out of bases
- Major indices trading above their 50-day moving average
- The number of new 52-week highs becoming significantly larger than new lows
- A major accumulation day (ie, a big rise on higher-than-average volume) during the rally
- Weekly MACD in buy mode
The most important thing I’ve found is there’s no need to rush straight back in after a sell off: you have to be patient.
Fortunately, if you wait for the market to heal itself a bit and create some set-ups there’s usually heaps of opportunities — hopefully much safer ones — still left.
Based on current market action, where does this leave me? Largely on the sidelines: the major indices are showing no signs of momentum … yet.
Word Count: 156. This entry was posted on Monday, September 10th, 2007 at 11:24 am and is filed under Uncategorized. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
September 23rd, 2007 at 11:50 pm
[...] Last week in a post I said the market wasn’t showing momentum traits. [...]