We’ll get straight to the point…it is highly unlikely that this market has finally turned the corner and is now pressing forward. There are far too many variables stacked against this market, to think that it can move upwards without investors having confidence that the worst is behind us and that those problems that still remain can be forgotten about.
The Nasdaq has had three straight days in the positive, but don’t think that the bears are just going to pack it in and not challenge this latest rally nor will investors who have seen similar rallies met with strong sell-offs not want to take some profits. The key is to be realistic with yourself and this market.
Markets that are in a severe correction/recession, just don’t wake up one morning and decide its done with driving share prices lower and is now going to blast-off to infinity. Instead it will continue to test the bulls over and over, until the bears have been thrown out on the curb after repeatedly failing to drive the markets lower. Then and only then will you see the market move forward once again. Its not going to be huge chucks at a time either, rather it will be baby steps: a few points here, a few points there, while giving up a few in between.
So the morale of the story here is that you shouldn’t test the waters with both feet – you’ll sink straight to the bottom!
Here’s the Nasdaq and S&P charts…