Dawn Bolton-Smith on another signicant pivotal point in the stock market.

There is little doubt, after Wall Street’s collapse on 21/22 January 2010, that we are in for another leg down in the bear market. Santa Claus has hibernated now, no doubt resting at the North Pole. Buyers who came in late are no longer winners; they are starting to show substantial losses already. Moreover, bad news is coming out thick and fast. Regardless of who is to blame, it is all part of the longer-term cycles – the recovery was too soon and a lot more base building is necessary for a sustainable recovery to occur. It is, ultimately, sentiment that turns the markets. This is no time to be without charts, and, I believe, it is best not to fight the tape.

The charts I maintain on dividend yield and price/earnings ratios are at the heights they were at the bull market top. They tell the story that the market is no longer cheap by these standards – but I prefer to leave that to the fundamentalists.

Regardless of what happens, it will be, again, a great year for traders...

Excerpted from an article originally published in the Mar/Apr 2010 issue of YourTradingEdge magazine. All rights reserved. © Copyright 2010, MarketSource International Pty Ltd.

To read the rest of this article purchase the back issue today click here.

Excerpted from an article originally published in the Mar/Apr 2010 issue of YourTradingEdge magazine. All rights reserved. © Copyright 2010, MarketSource International Pty Ltd.

To read the rest of this article purchase the back issue today click here.

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