The market seems to be selling-off on the back of limited bad news imo, apart from the dollar that is.

If you can hold your nerve and apart from any short term requirements to offload poor performing stocks, I have a couple!!, my advice would be sit tight. This does not have the feel of the tech(mining!) bubble at all. Difference being there are a lot of good fundamentals, unlike in 2000 when there were a lot of over rated nothing companies.

Another lurch in to the abyss!
I think you are right, Al. The credit squeeze is starting to have an effect.

AFX today:

"Still, market volatility is high and credit concerns are running deep, so it's unclear if any of the day's news will allay investors' fears of a major correction. Another factor that could weigh on the stock market Monday is China's decision to tighten its credit again to rein in the country's excess cash by ordering banks to hike their reserves."

IMO, it's just a matter of when, not if to a big market correction.
Many people on these boards seem to be converting their stocks to cash & I confess I have started to do that too.

my chart guru reckons that if Dow breaks down through 13255, which is pretty much where it now sits, then 12000 becomes the downside target, though of course there would be upward spikes en route

Tend to agree with Harry... instead of "go away in May" it's been "go away in July" think this sub-prime business may run deeper or rather wider.

It all just confirms my sentiment of the last six months.

I think all these sharp corrections are the ripples of a much larger event waiting somewhere over the horizon. I'm not sure what it is, or even when it'll arrive, but I'm pretty sure it's coming. Everything up until now has been pretty much "predictable", meaning those that can, have been ready to short when oppertunity comes. The "crash" event will be unforseen though, probably something linked to credit (debt) in some way, but not necessarily obvious. With each of these ripples, investor sentiment is slowly erroded away, and with it market support. When the support has gone, even the smallest events can cause a crash. In my opinion......

Strawbs.

My current policy has been to get out of speculative plays and invest only in profitable companies who are growing and are undervalued on current and/or forward earnings projections. Whilst sp is not immune on bad days, especially if there are profits to lock-in for some investors, there should be upside for such companies that are not exposed to US whether the bubble bursts or not.

good companies and bad have their peaks and troughs .... the difficulty is to determine when is which!

Sitting in cash on the sidelines is a position in itself. ;-))

morning Al ..... played the dangerous game yesterday of buying Dow on its supposed support line .... got it right thank goodness .... and had the sense to close it with a respectable profit rather than run the risk of losing it all back ..... as it happens, Dow continued on up, but who cares?

Not dangerous buying on support, cynic. ;-))

so it proved, but only because the support proved to be such!

That's why you buy it, non? LOL

Similarly that's why we sell/short resistance.

If this sell-off repeats the last two (May 06, Feb 07) then I'd expect the bounce to last a few more days and then another sell-off after the weekend. Interesting that these bouts of fear are getting more frequent. 9 months, 6 months........Could the next big one be in October? I'm sure I read somewhere that most market crashes happen in the Autumn...... Glad to have a purely cash position. :-)

In my opinion etc.....

Strawbs.

Strawbs ..... sorry to be critical, but you have been in cash for months and months, and though it is very safe to put your money on bank deposit, it earns FA ..... meanwhile you could and arguably should have made a lot more in the markets ...... it will be a bit of a Smart Alec comment to come back if (when) there is a major correction in a few months to say "Told you so", when you have been preaching overall doom and gloom for months - and been significantly wrong to date

That's fair enough. At least I'm consistant. :-) My reasoning is that you can't predict when momentum will switch significantly negative, but you can see the potential of a big correction that may cause significant losses. So far these corrections have bounced and moved higher. I believe eventually the bounce won't arrive, and people will loose a lot of money. I also believe that my locked in profits will average out (even at what I agree is a poor interest rate) a far better return than staying in uncertain markets.

If you can monitor the markets all day and move in and out as appropriate, then you have a lot more free time than I do.

My postings are merely an opinion or observation that some may find useful and others will choose to ignore. I won't be telling anyone "I told you so", nor as far as I'm aware have I ever done so to date.

Strawbs.

i have no dispute with you Stawbs as well you know, but I am sure history has proved that even if one invested a week before the Great Crash, the immedaite losses were made good within quite a short time and of course stocks have consistently outperformed cash for decades

Interesting statement from Worldspreads today:

"The markets are at the moment poised to make an extremely slow return, gaining back half of what the indices lost last week is not expected to happen until September assuming the fallout of the US subprime and credit crunch has elapsed."

Which presumably means that the markets won't pick up until after the summer break (which is hardly news), but at least, by implication, they expect an 'Up' movement as opposed to a 'down' one.

their guess is prob no better than ours! ..... in any case, who would have predicted the strong showing yesterday and today ..... 20/20 hindsight makes me rue (slightly) that i took a good profit on the Dow about 100 pts back but still ..... today my fear would be (is!) whether this bounce is too hard too fast and will bring on another sharp correction

Over long periods it will average out better than cash. But if you made say 250% in equities over 3 years (during a boom), then 5% in cash over the next four (during a downturrn), I think your overall average in and out of the market will still be higher. All down to timing and how you do the maths I suppose. You also have a fairly constant "cash value", where as in the markets you may have stellar returns for 3 years, negative returns for 4 years, average out OK, but be restricted as to where and when you can access your "pot".

My investment stratergy has always revolved around being in the markets when interest rates are very low (because it stimulates growth, which should be good for companies/spending) and out when rates are high (relatively speaking, because it constrains growth/spending). At the moment I think rates are high when you consider the levels of debt, and I suspect continued inflation, particularly in commodities.

I'm sure I read something by Schwartz (the market historian) who was saying that recent history is actually showing negative returns in the markets. If you invested at the peak of the tech bubble, I guess you'd still be averaging a negative return, even worse when inflation is factored in.

Strawbs.

I feel sure that many people are playing this current bounce & will take profits soon. BoE rate review thurs. My money is on another bounce down towards the end of the week.