Bull or Bear

The current stock market trend matters tremendously when you are trying to decide what stocks are worth owning and what stocks should be sold. Long term bull markets will have plenty of bear rallies with the reverse being true in bear markets where short-term bull rallies will occur. Since the middle of December, we have seen primarily a bull market trend. Bears have been gored. One recent example of this has been TVIX, the double volatility ETF. This stock never dropped below $16 per share in all of 2011 and was higher than $100 per share in the first part of October 2011. This all changed starting in December to the present. TVIX was in a free fall during the past three months. If you were expecting the former $16 bottom low to hold, you would have lost money for a while when TVIX dropped below $14.

As of the week ending February 24, TVIX was hanging around the $16 to $17 range with increasing volatility. The volume has been rising since TVIX formed a bowl bottom in the $14 range. The stock has also crossed the $20 mark two times recently. This is a case where you can probably make a small amount of money on TVIX during a bear rally within the greater bull market trend.

How do I know we are are in a bull market primary trend? The best place to look for support on this idea is the St. Louis Federal Reserve website where you will see charts of improving employment statistics along with low inflation and other good economic news. Two good stocks to own in the 2012 bull run are Clean Energy (CLNE) and Westport (WPRT). They are both involved in using plentiful natural gas for transportation purposes. Clean Energy is building natural gas fueling stations coast to coast and north to south. Westport is building natural gas engines for large 18-wheeler trucks, fleet trucks, and passenger trucks. After the nation-wide infrastructure is built, manufacturers will also be building natural gas cars. This revolution could possibly become as powerful as the computer and internet explosion of the 1990s!

Stock Market Timing

The holy grail of making money in the stock market is knowing when to buy and sell. I have recently discovered a couple of charting techniques that could come close to solving this mystery. I will also give some stock examples and charts to illustrate this. After you sell the stocks according to this timing scheme, it will be imperative to keep the trading money in cash until the next buying signal. This is to protect profits. If you can make 20 to 30% a few times each year from this plan, you will eventually see the value of sitting in cash sometimes.

If you want to know whether we are in a bull or bear trend, just look at a chart of the S&P 100 percent of stocks above the 50 day moving average. If the successful stocks total line is above the 50 day line, then it will be safe to own stocks. You could sell whenever you are up 20% or whenever the S&P 100 bullish chart falls below the 50 day average. One specific stock that you could own to go along with this plan would be SSO, the leveraged S&P 500 ETF.

Another chart plan for buying and selling involves the slow stochastic signal line and the MACD signal line. Pick a popular stock like AGQ, which is leveraged to the price of silver. Whenever the slow stochastic signal line crosses over at the bottom, you should buy AGQ. Then, whenever the MACD signal line crosses downward from the top, you should sell. Buying with the slow stochastic signal will get you in the trade at the best time, and holding on for the MACD downward crossing before selling will smooth out false signals that appear on the upper slow stochastic signal line.