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Why I'm Buying Stocks Today

By Jeff Clark
Tuesday, July 6, 2010

"You have 74 new messages."
 
That was the response I received when I hit the "play" button on my answering machine after returning from a three-week vacation. There were plenty of "If you'd like to lower your mortgage..." and "Call to increase the interest rate on your savings..." type of messages.
 
But there were also dozens and dozens of calls from friends who wanted advice on what to do about the stock market – and all of the messages were left last week.
 
Everyone is bearish. Everyone is worried. And everyone wants to know if selling now is a good idea.
 
Nobody is interested in buying.
 
I didn't realize I had missed so much over the past three weeks. But after catching up on the news reports this weekend, going through about 2,000 unread e-mails, and reviewing three weeks worth of the financial articles and blogs I normally read on a daily basis, it feels like Armageddon is approaching.
 
Stock markets around the globe are declining. Currency markets are in turmoil. Country after country is threatening to default on its debt. International tensions are heating up. The list goes on and on.
 
No wonder everyone is bearish.
 
But here's the thing...
 
The stock market doesn't crash when everyone is looking for it. And if my answering machine is any indication, everyone is looking for it.
 
Of course, I'm bearish. I've written plenty of negative articles on the economy and on the stock market over the past year. So, yes, I'm looking for lower stock prices later this year.
 
But as a contrarian by nature, I start to doubt my thinking when everyone else agrees with me.
 
It doesn't matter how bad things look right now. The world has a habit of not coming to an end. So betting on Armageddon is a bad bet, and not one you should make today.
 
I'm not trying to be a Pollyanna, and my sunglasses don't have a rose-colored tint. The proper way to trade a bear market, however, is to buy into extremely oversold conditions and short stocks when they're overbought.
 
Based on the phone calls I returned this weekend, I'm buying stocks today.
 
Best regards and good trading,
 
Jeff Clark




In The Daily Crux
Market Notes
Discount stores BJ's Wholesale and Dollar Tree hit 52-week highs on Friday.
 
Euro up four weeks in a row now... the euro short is off.
 
Secondary education sector getting destroyed... Apollo Group and Corinthian Colleges at new 52-week lows.
 
Cigarettes buck market downtrend... major player Vector Group at new 52-week high, yielding nearly 10%.
Market Watch
Symbol Price
Change
52-Wk
S&P 500 1028.06 +0.5% +14.4%
Oil 32.61 +0.0% -6.1%
Gold 116.51 -1.7% +28.4%
Silver 17.40 -0.3% +32.8%
US-Dollar 84.07 -0.4% +4.6%
Euro 1.26 +0.7% -9.7%
Volatility 29.65 -1.6% +2.2%
Gold Stocks 446.78 -1.3% +35.8%
10-Year Yield 2.93 -1.7% -16.5%

World ETFs
Symbol Price
Change
52-Wk
USA 102.87 +0.7% +14.6%
Canada 24.82 +0.9% +19.0%
Russia 16.91 +0.8% +9.0%
India 30.18 +0.2% +4.0%
Israel 13.37 +1.3% +17.9%
Japan 9.46 +2.1% +0.8%
Singapore 11.56 +1.1% +30.5%
Taiwan 11.76 +4.2% +14.0%
S. Korea 45.45 +2.7% +25.9%
S. Africa 54.62 +2.4% +19.7%
China 39.76 +1.9% +4.2%
Lat.America 42.51 +0.6% +25.4%

Sector ETFs
Symbol Price
Change
52-Wk
Oil Service 97.50 +1.2% +5.8%
Big Pharma 59.59 +0.7% +1.0%
Internet 48.93 +0.3% +20.0%
Semis 11.97 -0.9% +12.9%
Utilities 28.49 +1.2% +3.2%
Defense 15.92 -0.8% +16.7%
Nanotech 8.26 -1.0% -4.2%
Alt. Energy 8.39 +0.6% -12.8%
Water 14.76 -0.8% +5.0%
Insurance 13.90 -0.7% +21.6%
Biotech 16.87 -1.2% +25.5%
Retail 15.33 -1.7% +14.9%
Software 19.97 -0.8% +22.5%
Big Tech 42.60 +0.3% +20.3%
Construction 10.80 -1.6% +2.9%
Media 11.12 -0.5% +32.4%
Consumer Svcs 53.30 -0.4% +23.4%
Financials 48.80 +0.2% +18.9%
Health Care 57.89 +0.3% +9.1%
Industrials 50.55 +0.1% +24.5%
Basic Mat 53.00 +0.3% +28.0%
Real Estate 45.32 -2.0% +42.1%
Transportation 70.52 -0.6% +24.4%
Telecom 18.55 +0.0% +7.4%

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