Saturday, April 18, 2009

Is it time to get back into trading stocks?

Have we reach the bottom?

Consider this:

  • For the first time since 2007, Wall Street had six winning weeks in a row.
  • Dow Jones industrial average was up 5.90 points, or 0.07 percent, to 8,131.33, while the broader Standard & Poor’s 500-stock index was 4.30 points, or 0.5 percent, higher at 869.60. The Nasdaq gained 2.63 points, or 0.16 percent, to 1,673.07.
  • Shares of Citigroup closed 9 percent lower, at $3.65. But its worth was less than a dollar last month.

Maybe we are currently at the top, and a correction is about to happen. So, Is it time to get back into trading stocks?

I have two answers:

1. I think, yes, provided you are investing for the long term. The correction which could possibly happen next week would not matter, for certainly, the stock market would be up up there (higher) next year and the year that will follow. Just choose your stocks wisely.

2. But if you are a day trader, or a short term trader, I think, no, I shall wait for a correction, before I buy. There has to be a correction before a new highs is reached. Here is a quote:

“The market has had an enormous run since early March, and it’s overbought,” Nick Kalivas of MF Global said. “I’m not sure I really want to be a chaser of the market up here.”

PS. I am not a pro, seek a professional adviser before you trade. Trade at your own risk :).