Tug of war - Bull vs. Bear Part 2

A similar post was published last week on Feb 23^rd. Since then, there were a lot of happening in Asia and on both sides of the Atlantic.

As you probably know, Europe was overwhelmed with their 2^nd LTRO, US had a better revised GDP estimate, expansion in Manufacturing data from Asia to US and Bernanke’s testimonial. There were lots of volatility with the commodity currencies strengthening; the Euro weakening, Gold and Silver plunged! The price of Crude Oil rose from an Iranian report of an Oil pipeline explosion in Saudi Arabia.

How exciting? Let’s see where the Dow Jones, S&P and NASDAQ closed off for the month of February?

Hmmm! It seems like all the 3 major indexes had tested the resistance. Well, today is Friday and it would be interesting to note how the major indexes would close for the week. But on the whole, the activities is still displaying that there’s still a tug of war between the bulls and the bears. The indexes are still range bound. Huh? How boring? Tempted to go in?

I had received many emails and queries. Should we chase the market? Can we buy now? Now we all know;

BUY low and SELL high.

Isn’t this a very simple logic? What’s my point?

The levels we are seeing today for the Dow and S&P was last experienced in 2008, the Nasdaq is at 2002. We also know that the bottom was somewhere in March 2009. Hence, we’ve reached back to the levels of 2002 and 2008. What does the level of US index tells you???

Are the current levels at the high or the lows (of this trading range)?

Are you going to take profit or wait for more profit? Risk-reward?

Are you taking on more buys or adding new position?

We all know that we should buy LOW and sell HIGH. If you were to buy know, are you buying at the low or high?

What is the risk reward for accumulating new buys here or if you were to take profit here?

I hope I made myself CLEAR. You are the decision maker!

If you find this post informative, please do not hesitate to forward this to someone who might agree with this line of reasoning. Thanks in advance!