Market In Confirmed Uptrend

On Wednesday, the Investor's Business Daily changed their Big Picture column's current outlook to "Market in Confirmed Uptrend". Once you've read the IBD for a while, you'll notice that sometimes like this month, it might change but the market doesn't really go up and the market goes back into correction. I've noticed that many readers of the IBD take offense to this by some of the their comments in the forums and on the articles at investors.com. The key thing to remember about the current outlook when it's changed to an uptrend is that it's not a guarantee the market will go up. It's only and indicator that the market has changed direction. Not every change in market direction leads to a new bull market but every bull market has started this way. The IBD is only telling us what the market is telling us, not their opinion.

So what do you do as an investor. Well, during bear markets or when the market is in correction, spend time working on your watch list. Do the best you can to identify the potential leaders that might emerge when the market rallies. These are the stocks that will lead the market when the market starts going up and history has shown that these stocks are often the strongest stocks to buy. Stocks that break out later might be good buys as well but maybe not be as strong.

You should treat a market in a confirmed uptrend as the real deal each time and act accordingly. From that point forward, keep a close eye on the market by looking for distribution days. More importantly, if you have taken a position in a stock, don't let it go more than 7-8% below your purchase price. If it doesn't seem to be acting like a leader don't be afraid to sell it before it reaches that point.

The key is this, you are going to have to let the market tell you when to get into and out of the market. Don't rely on emotion or pundits on tv to guide your stock market investing. If these people were right all the time, a lot more people would be a lot richer because they would have advised people to cash out long before they lost half of their money in 2008.

In the meantime, learn to let the market tell you what to do even if it later appears to have been wrong later. It's been right a lot more.