By Ryan McGuire
I might be wrong, but as far as I can tell from the data, we've hit the bottom. One reason I say this is because the Dow Jones ended up today, thus keeping above the key levels of the previous cycle lows I was talking about yesterday. At the same time, the Transportation average traded down past this critical level, made a low for the day, but then traded UP, closing just a hair above that key level. That gives me some confidence to start wading into the market.
Again, caution is warranted. Low beta and stable dividends and cash-flow are paramount, unless you are willing to take on a lot of risk (read: you have a long time horizon). One thing you can do is to dig around for dislocations in the market. Watch for solid companies that are experiencing sell-offs despite a stream of news that isn't worthy of such a sell-off. Even better are companies that are selling off, despite consistently good news streaming out of their newsrooms. Sometimes all companies (ie small caps) get painted with the same brush, and that can give investors excellent low risk buying opportunities.
This = a market that is damn shaky, but poised to move up from here. In fact, the Dow could still shed 400 points and we'd still be in healthy correction, as long as the transportation index continues to hold above the last intermediate cycle low of 4847.73.
R
