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The Diamonds (AMEX: DIA) ETF is bouncing back in very early action, as global governments take aggressive measures to shore up the world's banking system.
Chart Courtesy of StockCharts.com
Yet, this may or may not be the bottom for the stock market, although it's hard to see the current action as anything but at least part of some kind of tradable bottom.
Indeed, this is one of those tough moments for all investors, as fear and greed fight for supremacy. Instead, how about rational thought as a driver for decisions?
Look at the charts. This is a hugely oversold market that has been down for eight straight days. The odds are in favor of it rising, just because it hasn't risen in over a week.
Look at events. The entire weight of all the major governments in the world has been thrown into combatting the market's meltdown. Governments can't let the market's fail, not when Muslim clerics are calling for a Muslim style financial system to replace capitalism.
Look at the guy in the stall next to you who doesn't believe in technical analysis. His 401-k has lost big bucks and he's getting ready to sell now.
These are all signs that something significant is happening. And if you remain pragmatic, you can be successful.
What's a good strategy? Buying small amounts of index ETFs. Keeping close tabs on them. And using sell stops that limit damage to 5 to 8% at most.
While you are doing that, you can start putting together your buy list. If this is the bottom, we'll know for sure within a week or two or sooner whether to start buying more aggressively.
Otherwise, you could make a few bucks if you play this bounce right.
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Doctor Joe Duarte's Market I.Q., offers subscribers a unique blend of intelligence, market commentary and trading strategy. Duarte's daily articles, and news summaries offer recommendations and analysis for ETFs, and individual stocks in the technology, health and biotechnology, and energy sectors. Doctor Duarte is a writer, and an emerging futurist, with a diverse background, and a growing audience. His combined expertise in health care, energy, and the effects of politics and global intelligence on the financial markets offer a unique blend of insight and information to thousands of active investors and political and intelligence aficionados around the world on a daily basis.
He is the author of four books: "Futures And Options For Dummies," "Successful Energy Sector Investing," "Successful Biotech Investing" and co-author of "After-Hours Trading Made Easy."
In early 2001 Dr. Duarte in "Successful Energy Sector Investing," correctly predicted that Venezuela's political problems could lead to an energy crisis in the United States.
In 2003, also Dr. Duarte was among the first to widely publicize the long-term friendship between French President Jacques Chirac and Saddam Hussein.
He has also appeared as a weekly guest on Market Mavens Radio, has logged appearances on KNX radio in Los Angeles, Financial Sense.com radio, and Wall Street Radio.
One of CNBC's original Market Mavens, Dr. Duarte has been writing about the financial markets since 1990.
His articles and commentary have been featured on CBS Marketwatch, Barron's, Smart Money, Medical Economics, and in Technical Analysis of Stocks and Commodities magazines.
In 2003, Doctor Duarte received second place, in the professional section, of the Medical Economics Investment Challenge with a 12-month return of 42%.
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