I was considering looking for some good long stocks with the
recent week of gains but this morning’s manufacturing report of 36.2 versus the
expected 38.4 has the markets falling sharply close to mid-day.
Watch for a Buy Signal
Before making a stock investment in this environment, I am
watching for a buy signal on the three major averages, the NASDAQ, the Dow
Jones Industrial Average, and the S&P 500. If the NASDAQ can break above it’s
most recent high near 1765 that will be a good sign. Additionally, the Dow
above 9580 and the S&P 500 above 1000 are all positive signs that a rally
is underway.
Be Cautious of another Sell Signal
But the markets could just as easily break below their
recent lows and make a further corrective move before the end of the year. The
NASDAQ below 1285, the Dow below 7440 and the S&P 500 below 730 would
signal the continuation of the bear correction.
The Trade
Remain cautious and on the sidelines as much as possible
until there is a clear signal/breakout to the upside or the downside.