I think the stock market is going to keep going down... or plummet. I suppose if you had good timing you could make money off a dead cat bounce here and there. But I'd hold off on buying stocks if I were you.
It has got to start going back up at some point. Now, whether that point will be in 2 months, 6 months, a couple years, or longer, is anyone's guess. Just like any bubble bursting, this is only a temporary state. If I had any money, I'd start buying in about now since the prices are getting so enticing.
The SPX violated it's low at 741. That opens it up for a drop to the 630-640 range. Ultimately before the market can start to make any kind of meaningful recovery we will have to visit those low 600s(or possibly even lower). We could see a bounce up to the 850-900 range before we do but it's looking less and less likely. There is still a massive amount of junk assets that have to be flushed out of the system and a real value(of basically zero) assigned to them. This is why all the banks and their apologists on tv are always bad mouthing "mark to market". They all know that they have huge amounts of assets on their books that are essentially worthless and under no circumstances do they want these junk assets marked to their proper values. If these assets were valued correctly, most financial insitutues would be insolvent. So far pretty much everyone has underestimated the severity of this thing. Don't be one of them.
Here's a few things to try and keep people from getting torn bloody.
This is a severe recession boarding on a depression. If you try to "average in" on the way down with this thing you are going to get torn to shreds. The talking heads on all the financial networks were talking about how "depressed" prices were last year and how they were once in a lifetime buying ops. If you had bought any of their picks at that point you would now be down +90% of your initial investment(most of them were plugging financials then).
Cash is a position. Don't be afraid to be all in cash. You are better off just selling and going to cash then trying to trade a violent market like this without the proper skills to do it safely. It's vastly better to earn 0% on your money then lose +50% of it by buying falling knives and just hoping for a turn around. Capital preservation trumps earnings return.
Don't get confused by the numbers. If you've lost 50% of your investment, you have to make a 100% gain on the capital you have left JUST TO BREAK EVEN. As I said, if you are getting smoked, zero returns on cash is better then losing your capital.
Gold is possibly a good trade going foward but right now it's correcting. It went up and put in a double top and it's pulling back right now. It has a nice well defined upwards trend channel. I'd be looking to get in on a succesful test of the bottom of that channel. However, if we do have a "crash" or just severe selling, gold won't save you. When panic is in the air, EVERYTHING get's tossed overboard, that would include gold.
I attached a picture to show you how severe this is. It shows the SPX for the past 20 years. We have already blown past the bottom of the dot com crash. Today we also violated that 741 low we had back in Nov(not good). Look at this chart and tell me where you see any kind of support below there. It's basically empty air till you get to 600, and there's not much support there to speak of. You can also see how severe this is by how fast it's sold off. The dot com crash took 3 years to get to a bottom. We've already past that point in just ONE year.
