Stocks ended the day lower on Friday after an attempt to come back above the positive line failed miserably. We have seen the markets trying to rally the last 2 days only to get sold off in the last hour of trading. The news out of Washington is having a negative impact on stocks. The markets are now clearly in a correction mode. In terms of technical indicators, the markets are a little bit oversold in the short term but we still don't have extreme levels yet. On the other side, the fear indicators like the VIX and P/C ratio are still not very high compared to where we were last year. So we might still see higher volatility ahead.We recommend staying mostly on the sidelines and watching the price action for any signs that indicate a turning point in the markets.
Where is the market headed? Never invest in stocks if you don't know where the market is going. Most of the stocks will follow the general market direction up or down. If you think the market is headed higher then you can start buying the stocks you like. Once the market turns and you become negative, then sell all of your loser stocks at once. If you have stocks that are up considerably, sell and take your profits. If you have stocks that are slightly up and you want to hold on to them because you think they have upside potential, you should keep watching them closely. If they fall below your buying price, then you should sell and cut your loss.
Notes on how to read our Stock Newsletter: 1. Our Stocks and ETF recommendations are not meant to be used for Day Trading purposes. We won't try to call the market direction for one particular day. 2. Our market view reflects our sentiment on the overall market. It can be one of three states: BULL, BEAR, or NEUTRAL. We only recommend buying stocks when the sentiment is BULL. BEAR means that we recommend selling stocks and staying in cash (or short stocks in some occasions). When we are neutral on the market, it usually means that the sentiment is changing and we will indicate if it is positive or negative in our commentary but we don't recommend buying at that point.
* Investing in stocks is risky and can lead to financial loss. Past performance is not indicative of future results. We do not assume responsibility for any profits or losses when trading stocks listed on our website. The information on this website is meant to be used as an additional tool to assist you in your trading decisions.
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