Market correction analysis

In my previous blog I mentioned that I was looking for a market correction around 12000. We did not have a correction at 12000 but we went ahead to around 12400 before make a dive and recent earthquake in Japan has left the down below 12000. If you take a look at a six month picture of the DOW we see a similar pattern in the last market correction in Novemeber 2010 when the DOW corrected from 11400 to 11000.

Should you be buying in this market dip?

Long term investors may look at this as a buying opportunity and short term traders may well think of looking to get in for few days. With previous market corrections some aggressive strategies that did well were finding most beaten down stocks in the current market correction.

Recently I have been following James Stewart from Smart Money. In his latest article he suggest these growth stocks when market makes a 10% correction which means a 2541 on the NASDAQ.

Market bears look at the volatility and uncertainty over impact of the Japan earthquake and predict that markets might go down further.

Last few days have seen some selling at high volumes and volatility which means there might be further downside potential. What are your thoughts? Will you be buying in at these levels?


Fibonacci series for this last bull run from 11000 to 12400 for the DOW returns 11544 as the 61.8% mark at which some support could be seen with the DOW bumping on these levels.

As for long investing I would add positions into my long term portfolio.

Market patterns and investing

With the current bull market initiating around March of 2009 we see some dips or selling as the market continues to climb. One of the past two run ups one from February to May 2010 in which the DOW climbed from 10000 to 11200 and then from Sept to November 2010 when the DOW roughly climbed the same amount. If past is any indication of the future then will the DOW have a correction in February around 12000 ?

If you are a buyer: One theory in long investing suggests buying in an uptrend. However as everyone knows market comes down quicker and bigger than when it goes up. Should an investor take a risk in getting in the DOW ride or wait for a correction?

If you are already in a market and want to cash out you might be looking at good exit points:

Technical pundits typically will advise selling a stock when it moves below its 20 or 50 day line. Investors business daily has a small course on sell signals .