How "deeply oversold" markets are???

Everyone knows that markets are deeply oversold @ Friday's close.....& PESSIMISM is very HIGH...a CONTRARY indicator!!!!

Here are the numbers to keep in mind:

Dow 52 week low........... 11508.70
Friday's close ................11842.69
points from low................333.99
% from low.........................2.9%

NASDAQ 52 week low......2155.42
Friday's close...............2406.09
Points from low..............250.67
% from low.....................11.6%

S&P 500 52 week low......1256.98
Friday's close...............1317.93
Points from low...............60.95
% from low......................4.8%

It IS always interesting to analyze where the relative strength IS.....

Weakest index is DOW...followed by S&P 500

Relative strength IS being shown by NASDAQ...which IS 11.6% higher from 52 week low...in other words if you would have invested $100,000 in the markets...you would have been WISE to put in NASDAQ...which IS DOWN the-least......

The question IS...how one needs to view the "current state of the markets"......most of US know that based on above statistics......it IS a down trending market ...based on last 52 weeks performance????

Markets are also telling US that last whole year investment WAS a losing proposition......

BUT.......if you believe in $ cost averaging then this IS the best year to do that.....as your cost of purchase SHOULD be coming down.....to POSITION for FUTURE GAINS !!!!!

BUT....generally people are EUPHORIC near HIGHS and put serious money to work...but take money OUT when markets are trending DOWN?????

Opposite SHOULD be done to make serious money "Buy LOW SELL HIGH" should be the MANTRA.......

On an extended period markets do go UP and trend HIGHER.......based on historical facts !!!

But the problem IS that NASDAQ hit 5000+ in 2000.......and it has been downhill for the last 8.6 years...a long time of downtrend line for this index...while S&P 500 & Dow did make new highs...

So the real stat are mixed for the 3 index ?????

So it BOILS down to stock selections........where MANY stocks have made new all time highs...

SO......if you would have done HOMEWORK and followed the TAPE.....you would have spotted AG,STEEL,OIL,GAS,SOLAR & select Technology stocks ...who kept making NEW all time highs....

It is NOT possible to spot all winners because of our OWN BIAS...but should have spotted WINNERS in your own area of "expertise"

I am "tech driven in terms of knowledge & TAPE"......so my top winner has been RIMM for the last two years.....where most of my GAIN came from......

So...it IS time to FOCUS on what you know best about the area of your expertise.....and FIND stocks which are doing well & will continue to do well......finding 3 best ideas is not difficult in 3 different emerging sectors.......but it REQUIRES knowing FA/TA......I tend to go 70% FA & 30% TA.......

Here is my $ weighting as of Friday's close :

MRVL.... 14.1%

SOL .......41.4%

RIMM......44.5%

Sometimes "over-diversification" IS a sign of NOT knowing enough about companies you have invested IN......or following a FAD trumpeted by some GURU !!!

Jim Rogers ...the famous trader believes in concentrated position if one has done their HOMEWORK......he believes that diversification IS a concept invented by brokers to generate commissions for themselves NOT to increase your returns????.....something to THINK about in Sunday's analysis !!!!

BLOG does NOT give buy or sell.

Saleem