Current Market Conditions: The Market Is Volatile

by | Mar 10, 2011 | Podcasts, Stock Market Comments

We encourage our readers and listeners to our podcast to consult with their investment adviser before making a decision to buy or sell any investment. If you do not have an investment adviser in the New York or New Jersey area, we encourage you to contact Mullooly Asset Management at 732-223-9000 or through our website.

Under no circumstances should any of the content discussed on this podcast be considered investment advice.

In this week’s podcast, we discuss two primary topics:

1. Predictions (and this week’s John Dorfman column)

Dorfman runs an “annual contest” to predict economic indicators of the year ahead. Here at Mullooly Asset Management, we find this to be a total waste of time. If you turn on CNBC or read any financial publication, that’s all they want: predictions.

Even though some analysts may have a great track record of predicting (or provide compelling reasons why their prediction may come true) – when you get right down to it, they are still only guessing.

Here at Mullooly Asset Management, we don’t believe in predictions – we focus on what is happening right now. This keeps us flexible. When we avoid predictions and drown out any emotional noise, we’re avoiding boxing ourselves in. Point and figure charts accurately tell us what is in charge – supply and demand. When demand is in charge of a chart, prices rise. This isn’t some theory we’ve come up with – it’s an economic law.

The only time emotions have the chance to cloud our judgment is when we look at the name on top of the chart.

2. Current market conditions: We have a very, very volatile market. We’ve had more triple-digit up and down days in the last month than we’ve had in the last six months. The volatility index (VIX) had formed a bullish triangle. What does that mean? All that tells us is that we need to expect and prepare for more volatility – a LOT of volatility – in the coming weeks.

Oil prices are up. People are worrying about higher gas prices. So what are we looking at? Short term charts are mixed – all of the short term indicators are starting to reverse down.

What does that mean?

1. Stop buying.
2. Look for trading profits.

And, when intermediate and longer-term charts look okay,

3. Build a shopping list.

What do we want to buy?

Longer term, this market is still very positively constructed.
Short term, we’re going to see a lot of sloppiness.

The Mullooly Asset Management Podcast can be found below. The Podcast can also be found on iTunes. Go to the iTunes Store and simply search for “mullooly.” Under no circumstances should the information contained in this blog or podcast be considered investment advice.

Thank you for listening. We welcome your comments and questions.




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