The S&P500 is now some 14% off its 2007 peak, and back below the millennium highs. Amongst individual stocks and sectors the decline has been even more substantial; with the S&P500 Banks & Financials index some 33% below its peak last year.
Seasoned investors will know that sell-offs like these create the opportunity to add real value to their portfolios; but when to buy? In the words of the great Jesse Livermore, it’s not the buying or the selling that makes the money, it is the sitting!
Could now be the time to move back into the market? Certainly the “sage of Omaha”, Warren Buffet has been issuing long term put options, suggesting that he believes the future may not be as black as it is painted. Read more here.
At Investors Intelligence we have developed a unique toolset over the years to help investors (both professional and private) to identify entry and exit points in the market. At the time of writing, our technical and sentiment indicators suggest that we are close to, or at, a significant long-term bottom in the equity markets:
Here’s what we are seeing:
- INSIDER ACTIVITY – Buying at a similar rate as at the 2002 bottom.
- NYSE BULLISH % - Breadth in late January traded at levels last seen in 2002-2003.
- BUY/SELL CLIMAXES – First eight weeks of 2008 have seen more selling climaxes than buying climaxes, indicating high accumulation.
- INDUSTRY GROUPS – Our Sector Sum indicator fell in January to its most oversold in over 10 years.
- WALL OF WORRY – Talk of recession, high commodity prices and sub-prime problems have created conditions that favor a long-term reassertion of stock indexes.
- ADVISORS SENTIMENT – Bearish sentiment is close to (but not yet at) levels last shown in October 2002!
Our analysts will be updating subscribers daily on movements in these key indicators. Will the basing process continue, with breadth indicators recovering above the long terms lows, or will we see a “perfect storm”?…… another leg down accompanied by the super-oversold levels seen in our Advisors Sentiment Indicator in late 2002.
We don’t know yet, but we aim to use these tools to give our subscribers the best chance possible of buying the lows. Why not sign up today to join the thousands of investors, brokers and fund managers who benefit from our services? The weekly Advisors Sentiment Report is just $149/£75/€105 per annum, whilst our premium daily online/email service is gives you full access to our Hotlines, breadth and sentiment indicators and II’s highly regarded online charting tools. Subscribing is easy – just click here
“The time to get interested is when no one else is. You can’t buy what is popular and do well." Warren Buffett