Thursday, January 17, 2008

Small Caps in Official Bear Market

The small caps have officially crossed into bear market territory.  The NASDAQ is 2% away, but along with the S&P500, NYSE, and Mid Cap 400, is now in mini bear market territory.  The DOW is now the lone holdout, but probably for not too long. 
 
I fully expect a counter trend rally to develop at some point soon, most likely within a week.  I would advise only the most aggressive investors participate.  The best course of action is to wait for a new round of short setups (experienced investors only), study your past trades for rights and wrongs, and start preparing for the next bull market.  The latter two are a MUST!!!!
 
There are almost no setups right now.  But keep an eye on stocks with excellent fundamentals that have corrected in line with the market or less.  Those will most likely be the stocks that will setup for the next bull. 
 
Don't get frustrated if the list you build suddenly gets taken out behind the barn and shot.  It's all part of the process of becoming a successful investor.  During bears I am forced to rebuild my list several times, as the selling rotates from sector to sector, stock to stock.  But you will find a few stock that survive list to list, and those tend to be the strongest out of the gate. 
 
We all work hard for that promotion and raise, the road to investment success is no different.
 
Good Luck
 
1/17/2008  Correction   Correction Levels 
Index  52 WKH   Start   Length   Low  % 10% 15% 20% 25%
Dow Jones Industrial Average  14,198.10 10/11/07        14.20  12,125.56 -14.60%  12,778.29  12,068.39  11,358.48  10,648.58
Nasdaq Composite Index    2,861.51 10/31/07        11.40    2,343.65 -18.10%    2,575.36    2,432.28    2,289.21    2,146.13
NYSE Composite Index  10,387.17 10/11/07        14.20    8,805.67 -15.23%    9,348.45    8,829.09    8,309.74    7,790.38
Russell 2000 Stock Index       856.48 10/11/07        14.20       680.13 -20.59%       770.83       728.01       685.18       642.36
S&P 400 Midcap Index       926.67 10/11/07        14.20       758.93 -18.10%       834.00       787.67       741.34       695.00
S&P 500 Index    1,576.09 10/11/07        14.20    1,330.67 -15.57%    1,418.48    1,339.68    1,260.87    1,182.07
S&P SmallCap 600 Index       445.82 10/11/07        14.20       353.06 -20.81%       401.24       378.95       356.66       334.37
 

 

 

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