3.13.09

3.13.09

            Two weeks ago we told you that the market was oversold and we were expecting a rally. Well the rally finally came, and what a rally it was. The Financials got the best move as a group. This is to be expected since they were the ones that got kicked around the worst.

            Do not let yourself get too excited though, it is still a bear market, and a traders market. It very well could be a suckers rally and some folks will say it’s time to get back in again. We have a saying, “We would rather be out of the market wishing we were in, than to be in the market wishing we were out”. There is going to be a lot of volatility going forward in this type of a market. The 'Vix' is a measurement of the market volatility and it is telling us to be wary. The economy is still in bad shape and will continue to be as long as the unemployment numbers keep going up. We want to see a flattening out of those reports. Then we can start to consider the likelihood of a turnaround in the economy.

            The rally could go on for a short period of time, but it not to be trusted with all that is wrong globally. Keep your powder dry, and wait for a better indication of change. Much of last week’s gains were due to “short covering”. Many traders have been playing the short side of the market and when they get even a slight bit afraid, they have to buy long to cover their shorts, which results in pushing the market higher.

            For now we are staying on the sidelines 100% in cash until we get a better signal to get back in the market.

Till next time

The MTA Staff