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Three Screaming Buy Signals

By Brian Heyliger
Monday, January 5, 2009

In the last seven weeks, we've covered three big reasons why now is a great time to be a buyer of stocks.
 
On November 10, we noted the record amount of buying from corporate insiders. Insiders were and still are buying at levels not seen in more than 30 years. This kind of extreme historically corresponds with sharp rallies in stocks...
 
 
 
Later that month, we checked in with supertrader Mark Cook for his take on the market. Mark is one of the few traders interviewed for the classic Market Wizards series of books on trading. He's also won numerous trading contests. Most importantly, he's so good at trading, he doesn't work for anyone but himself.
 
Mark has created several useful indicators that measure how overbought or oversold the stock market is. Back in November, his indicators led him to say stocks were so oversold, we were near the "buying opportunity of a lifetime."
 
Then, on December 22, we saw a screaming buy signal from the investment-advisory business... There's a dirty secret newsletter publishers didn't want you to know: Most of them are wrong about the direction of the market. So I keep an eye on the Investors Intelligence Bull Ratio – a ratio of bulls to bears in the newsletter advisory business.
 
 
 
It recently hit its lowest levels since 1989, meaning the advisory crowd is super bearish on stocks. That's a great sign a rally was around the corner.
 
 
Last week, the market "confirmed" the bullish fundamentals by climbing above 920 for the first time since early November. It's an important development in the market's new tendency to reach higher highs and higher lows. (It's also up 8% from the "buy point" I highlighted on November 24.)
 
If you haven't put any money to work in the market, don't worry. There's still time to be buying. We've had a good run in the past few weeks, so we'll likely see a small pullback here. But treat that pullback as a buying opportunity. After such a severe decline like we saw in 2008, the coming rally will be a doozy.
 
Good investing,
 
Brian




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Credit markets hammer chemical giant... Dow Chemical falls on axed merger, down 80% in 2008.
 
Earnings today... Mosaic
Market Watch
Symbol Price
Change
52-Wk
S&P 500 1223.12 -0.1% +10.6%
Oil 38.22 -0.2% -0.3%
Gold 139.11 +0.8% +22.3%
Silver 29.51 +3.2% +62.6%
US-Dollar 79.17 -1.3% +4.3%
Euro 1.33 -0.8% -10.4%
Volatility 18.02 +0.1% -15.2%
Gold Stocks 590.99 +1.6% +25.5%
10-Year Yield 2.94 -2.7% -15.5%

World ETFs
Symbol Price
Change
52-Wk
USA 122.76 -0.1% +10.6%
Canada 30.56 +0.2% +18.0%
Russia 21.98 +0.2% +17.2%
India 37.92 +0.2% +19.4%
Israel 16.76 +0.4% +10.4%
Japan 10.69 +0.5% +7.0%
Singapore 13.71 -0.2% +18.1%
Taiwan 14.92 +1.0% +20.2%
S. Korea 57.19 -0.2% +21.5%
S. Africa 72.26 +0.5% +29.7%
China 43.84 -1.3% -3.3%
Lat.America 53.21 +0.1% +9.2%

Sector ETFs
Symbol Price
Change
52-Wk
Oil Service 137.74 +0.1% +20.2%
Big Pharma 63.99 -0.2% -3.2%
Internet 72.58 +0.7% +25.0%
Semis 16.18 -0.3% +26.4%
Utilities 31.19 -0.3% +1.8%
Defense 18.47 -0.3% +8.9%
Nanotech 10.08 +0.5% +1.3%
Alt. Energy 10.24 +1.6% -2.0%
Water 18.62 +0.7% +13.8%
Insurance 16.08 -0.4% +19.0%
Biotech 20.56 +0.1% +26.6%
Retail 19.59 -0.6% +26.6%
Software 24.65 -0.6% +22.7%
Big Tech 53.85 0.0% +22.1%
Construction 13.20 +0.8% +14.8%
Media 13.73 +0.7% +24.7%
Consumer Svcs 67.38 0.0% +23.4%
Financials 55.01 -0.1% +5.7%
Health Care 63.90 -0.6% +1.2%
Industrials 63.51 -0.1% +19.3%
Basic Mat 74.64 +0.4% +27.8%
Real Estate 55.35 +0.1% +21.8%
Transportation 91.39 -0.4% +23.9%
Telecom 22.65 +0.3% +16.8%