Is it a good time to get out of the market? What an excellent question! It really depends on your timeframe.
This market is showing lots of mixed signals. The volatility in prices that generally accompany market tops is present, but the euphoria is not. In fact, there has been so much negativity in the general press (corporate profits down, recession a possibility, credit crunch, weak dollar, etc. etc.), yet the markets are flirting with all time highs, exclude the financials, and we would be above record highs. Maybe the gov’t bailout, rate cut, and expected year-end rally will be enough to offset all the gloom & doom, then we can have a serious sell-off…
Of course, the market will do whatever it pleases. I think the rally off off ~12800 (DJIA) tells the bears that we have some more time. If the market breaks below that, it could get ugly. Assuming a 1/2 pt rate cut, the markets could rally to their previous highs, or even beyond, though I’m betting that prices bounce between 14300 & 12800 for the next few months, until the other shoe drops in the credit markets, recession sets in, etc. Of course, the markets could blow past 14000 and never look back…
If I was a LT investor (hold for years), I would wait until the market really starts to break down, if it indeed does, otherwise your trying to catch the top, which goes against the definition of a LT investor… If intermediate, sell/short at the top of the range and buy/cover at the bottom, reversing quickly should any break occur & re-evaluate from there. The above pertains to US index funds/ETFs, not individual stocks. Also, these are my opinions, not advice.
Let’s hear some other opinions and ideas. Does anyone think that oil has had its run, at least in the next 6 months? Consumer spending over the holidays abyssmal or strong? Has China had its run for now?
