LunaticTrader

Investing with the Moon

Outlook November 8

Posted by Danny on November 8, 2010

Stock have risen to the 1220 area on the S&P index, reaching the target we set 2 weeks ago.
Now we are ready to go into a Red Period again, so this is a good opportunity to take some profits.

Given the big upswing we have had over the last couple of months, stocks could easily give back 10% within a few weeks, and a long term uptrend would still be firmly in place.

So what to do with a Red Period coming up? Since,we didn’t get any move downwards in the previous Red Periods.

I do not sell all my stocks every two weeks when a Red Period comes along.
Usually I will take some profits, and protect my portfolio with a few put options, especially when the market has just made a big move higher.
Another way is to put a stop-loss order at a very recent low. For example, if the S&P 500 falls back below 1180, then it will signal the probable end of the current upswing and the beginning of a larger correction.
Just be more cautious in Red Periods, historically the weaker period for stocks.

What is my expectation?
Now that most market indexes have broken to new highs for the year, we could get the long awaited correction or pause. So it wouldn’t surprise me if we go in sideways mode for the rest of the year. Down for the rest of November, up again to 1220 on the S&P in December.
Time will tell.

Good Luck, Danny

2 Responses to “Outlook November 8”

  1. nicole said

    how long does a period last? 15 days? I thought if last week was green period, then this week should be too. And when exactly does the current red period begin? Monday?

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