DOW down 10% in 2 days - No Bottom Insight

Oct 30th the Dow had finished up 189 points and some were talking about a bottom was now in place. I held quite a different opinion and stated it in Dow Up Not Necessarily A Good Sign.

I had previously blogged that I think we will need to test some support in the DOW that was put in place a few years ago at the 6500 level and I have not seen any signs that would deter my thinking on this. In fact it seems almost daily more individuals are losing their jobs, the unemployment rate continues to climb to record highs and more companies are either cutting staff or closing stores. And rate cuts no longer seem to be the magic bullet to hold up the markets.

So where does that leave the average individual investor? If you’re an active investor you keep watch on individual stocks. Good companies are not being spared in this downward spiral either and they will provide you with an excellent opportunity to own them at prices you would never have a chance to at any other time.

And if there is a silver lining in all of this, in my opinion that would be it. I am not a fan of trying to catch the bottom of either the market or an individual stock. I think you find a good stock and watch the economic news as it relates to that sector of the market. And as good news starts to outweigh the negative you might think about taking a position. Never take a full position at one time. This allows you to either average up or down as the sector start to regain traction.

The markets will come back in time. I am just as sure of this as I am the fact that they have more downside work to do before the bottom is in place. But a downward market does not mean you can’t make money nor create a solid portfolio of great stocks. Today the DOW closed at 8695.79 ( -443.48)  - only time and the economic news will tell if we will have to test the 6500 level on the DOW again but don’t be surprised when we do.