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| Is it time to buy stocks? |
US stocks are at or near the lows of the year. Is it time to buy or accumulate? |
 Aug 2011 |
| Yes |
| No |
| News Headlines |
| Aug 18, 2011 |
| Fear (VIX) Spike |
| Spike in volatility indices usually signals a market bottom.
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| Aug 5, 2011: VIX hit an intraday high of 39 -- one year high. |
| Bad Technicals |
| SPY seems to have broken recent support levels. |
| Bad Seasonality |
| Summer is usually not good for stocks. Wait till September to buy. |
| Relative Value |
| Buying when SPY is below 200 day moving average is a good relative value.
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| Aug 5, 2011: SPY is 3% below 200 DMA. |
| US Debt Deal |
| US Debt deal may result in spending cuts and economic slow down. |
| Reasonable P/E Ratio |
| Company earnings have been reasonably good and current P/E ratios look reasonable. |
| Aug 2011: S&P500 TTM P/E ratio is around 12. |
| Panic Selling |
| Indiscriminate selling usually signals a market bottom. |
| Aug 5, 2011: Major averages fell ~7% within few days and the US indices are in correction territory (> 10% drop from peak). |
| Negative News |
| News in the media is too negative and pessimistic - double dip recession, sovereign debt problems, etc. This is usually a contrary indicator. |
| Sea of Red |
For the first time in history, all 500 stocks in S&P500 index went down! |
| No Panic Among Pros |
| Aug 2011: Per Investors Intelligence Survey, market bulls actually rose to 47.3 percent while the bears dropped to 23.7 percent. Sep 7, 2011: Bear/Bull ratio is now suggesting pessimism among investors.  |
| Fund Outflows |
| Domestic outflows, excluding ETFs, hit $9.4 billion last week, surpassing the $9.2 billion outflow during a week in October 2008 and the most since 2002. |
| Aug 15, 2011 |
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