2009 stated off with a rally but how long will it last? The market has had several rallies for both the bulls and the bears in the last year. The big question is how the markets will do in 2009? While the year started with a bullish rally how long will it last?
Why I don’t think this rally will last.
Bad News Still Being Reported
Sears Holding Company which lost over half its market cap last year, started this year off by announcing that it is suspending their matching of employee 401k contributions. Might be a good idea to sell or short Sears (SHLD) here. Yeah, this is terrible news as it takes away one of the best attributes of the 401k. Sears is not the first company to do so; FedEx and GM along with others have changed their 401k contributions too. The stock market has yet to react to the news of Sears and will probably start next week off with a bearish turn.
Bullish Rally With Little Volume
The recent rally has come with little or less than average volume. Without the volume coming in I am not convinced the markets are ready to move upward. There is a lot of cash sitting on the sidelines and when this cash starts moving you will notice the volume will also pick up. This is my signal to hop in.
2009 Another Bad Year
You hear many analysts say that 2009 is going to be another bad year for the economy. Since the stock markets usually lead the economy by roughly six months, why would you buy now? If you are a longer term investor you might pick up a few stocks throughout the year to add to your portfolio. I have a longer term portfolio and pick up some stocks on the bearish rallies. I tend to be a shorter term investor and usually sell on the way back up.
These are just three reasons I think the recent rally will not last. If you have something to add, leave a comment.
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