Weekly Commentary for June 21, 2011

1250 on the S&P is the next support line for the markets.

If you are looking at individual stocks and mutual funds, a simple back-of-the-envelope test is to compare the current price to the recent lows set in March.

The March lows are another level of support, and you do not need to be a chart expert to see the low price for your stock or fund last March.

Remember, support lines are like BRICK WALLS, it takes a LOT to break through them.

Often, charts will approach their support line and change direction (UP).

If you are relying on a blog post for specific investment advice, you are making a huge mistake. Please speak with an investment adviser before making ANY investment decisions.

If you do not have an investment adviser, 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 post be considered specific investment advice.

How will we know when it is safe to buy?
We can’t wait for buy signals, that will take too long.

First, one of my short term indicators will start moving up. It could be the 10 Week moving average, perhaps.
We’ll start by putting a little money to work.

Then, as we see more short-term indicators turning positive, we will commit more money.

In what?
The sectors with the BEST relative strength, these are usually the first sectors to move. At the moment, that would be real estate, technology, and maybe gold.

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There is always some level of risk in the market.

When the market is on “offense” imagine you are walking across a wooden plank placed on the sidewalk. Even if you lost your balance and fell off the plank, there is little risk you would get hurt, right?

But now, suppose the market is on “defense.”

Same old wooden plank.
Except now it is placed between two buildings in midtown, Manhattan on a breezy day. Thirty stories up in the air.

If you wobble or lost your balance up there, you could get REALLY hurt.

When I say the market has flipped to “defense” the RISK of losing money becomes greater.

Doesn’t mean we WILL lose money.
Doesn’t mean we cannot make money.
It’s just that the RISK is a lot greater than before.