Wednesday, February 28, 2007

Market Correction Underway

On February 27th China's markets fell heavily causing a major sell-off in the US. The market is in a correction, which means, don't buy anything. In time there will be a new bear market and then we'll be in for some great gains. This correction isn't something that suddenly happened because of China. I'd like to point out a few days in the last month that were clearly telling us that we have reached the top. Look at the Dow Jones Index. Jan. 9th, we had a drop on higher volume. Jan. 25th we had a drop on higher volume. Feb. 8th and 9th we had drops on increasingly higher volume. Feb. 23rd and 26th we had drops on increasingly higher volume.

Feb. 27th shouldn't have been a huge surprise, and is why you should have a stop-loss in place, especially if you enter the market years into a bear market.

ANGN dropped below my stop-loss of $15.25, so I sold that on the 27th.
CMI dropped on big volume and is heading lower, so I sold that at $135.20 this morning.

The only position I still hold is in VASCO Data Security International Inc. (VDSI). Feb. 20th VDSI was in the IBD top 5 movers. It showed good fundamentals so I took a gander at the chart. It had been in a flat accumulation period for 5 weeks and had flown past it's buy point of $15.60. So, I bought it when it hovered around $17 that morning at $17.05. VDSI actually weathered the sell-off pretty well, which is encouraging. Plus it looks like some things are bouncing back today (that is not permanent), so with VDSI not dropping much, it may continue on it's upward course for a while yet.

My poor decisions so far of entering a bear market real real late, and buying ANGN at the wrong time have landed my account at $4832.00 as of this writing.

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