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Oscillator Says Market Direction Is Up

The above shows a graph of the Oscillator I follow. It doesn’t have dates at the bottom, but the big dips on the graph are the August and January lows. The current reading below the red line is definitely showing that the market is in oversold territory. This means that we are in for a short-term rally in the market.

We used Tuesday’s big selloff to buy shares in some of the strongest areas of the market: ag, natural gas, metals and gold. As the market turned around mid-day Tuesday and continued strong today those purchases gained nicely.

This short term rally gives us another opportunity to sell companies that are weaker fundamentally as the oscillator moves above the red line.

Market like this are very difficult to make money. You need to be nimble and make changes, selling weaker positions and adding to stronger ones. There are very few fundamentally strong areas within the equity market. As we work our way through this recession ( or economic slowdown if it turns out that there is no recession ) other areas of opportunity will present themselves – specifically I think that we will see a return of infrastructure, biotech, and defense – but for now ag, natural gas, metals and gold are the safe havens in which we are investing.