Making Money Alert
Turned Back at the 200 Day - Again
12/28/2011
The year is nearly over, but the volatility we’ve come to live with in 2011 is by no means over yet. On Wednesday, stocks sold off sharply as traders opted to bank the gains they captured in last week’s bullish action. Of course, this time of the year is characterized by very low trading volume, so the action during the past couple of weeks shouldn’t be read into too deeply. I do, however, think that the major takeaway from today’s action is the technical breakdown of the S&P 500 Index.
If you take a look at the chart below, we see that the broad measure of the domestic equity market has descended below the all-important 200-day moving average. This technically significant level has kept a lid on a significant market rally four times since October, and that tells me that there’s a lot of bearish sentiment out there among investors. In fact, today’s decline in stocks has put the S&P 500 back into negative territory for the year.
The chart here also shows just how incredibly volatile the year’s market performance has been, particularly since the July-August plunge. To be certain, this has been one of the hardest years for investors to navigate in recent memory. I think the key to coming out intact in this kind of environment is to consider cash your best friend. We’ve done just that in my Successful Investing advisory service in 2011, and it’s helped us weather this market storm nicely.
If you’d like to find out how you can keep your head about you when the rest of the market is seemingly losing theirs, then I invite you to check out Successful Investing today.