Recent weak economic reports in particular today from the service sector, has turn the markets down. At the time of writing this post, the Dow Jones is down by 293 points, and the Nasdaq (above chart) is down 54 points. From the looks of it, my guess is that the indexes will retest the lows set in the last few weeks.
My strategy, is still to stay out or take some profits right here, before it retest the bottom. I recall an analyst on Bloomberg television mentioning that it will not be until the end of March 2008, before things change. I anticipate a downward move, then probably some sideways movement until then.
I will begin to buy some more long-term option contracts (LEAPS) when the market is near its lows again. My strategy going forward to buy LEAP CALL option contracts expiring Jan 09 on stocks that I feel are good value.
I’ve had a good success rate with LEAPS, however with this strategy, it requires a lot more patience (several months) to execute, then what I was doing before this major downturn in the U.S markets which was get in and out within a few weeks.
Please read my Disclaimer.
Bookmark at:StumbleUpon | Digg | Del.icio.us | Dzone | Newsvine | Spurl | Simpy | Furl | Reddit | Yahoo! MyWeb
I think we are not out of the woods yet and the full implications of the housing crisis are not yet priced into the market.
==============================
Reply from Das Brain:
With recent increases in defaults on mortgages, people not being able to pay their mortgage loans, you may be correct here. Increases in people losing their homes, may contribute to lower consumer spending and hence damaging the U.S economy.