Preparing to Buy Low: Relax, Breathe, Wait, Shop, Buy

The stock market is going through a normal correction during an uptrend.  Corrections like this are healthy and normal, and give us an opportunity to “buy low”.

One of the ways that I know a correction is coming is that several of my stock positions get “stopped out”, a few days in a row.  When that happens, I hold onto the cash, watch the market averages, look for stocks with bullish charts (for example, charts similar to the other stocks I own which didn’t get stopped out), and I put in buy orders.

Here’s how the charts look right now:

Dow Jones Industrial Average year-to-date 06/04/13

Dow Jones Industrial Average
year-to-date 06/04/13

The Dow Jones Industrial Average is at 14,961.  There appear to be support levels at about 14,900 and 14,400.  Typically during a correction, a stock or a market average will do a double bounce at support levels, indicating a constructive chart pattern, and signalling a buy opportunity.  (Sometimes the market will instead form a bullish cup-and-handle chart pattern.)  I’ll be watching for that in the coming days, and alerting investors as to which stocks represent good buying opportunities with healthy chart patterns.

S&P 500 Index year-to-date 06/04/13

S&P 500 Index
year-to-date 06/04/13

The S&P 500 Index has a similar pattern.  The index is currently valued at 1608.90.  There appears to be support at about 1600 and 1540.

I believe that we have at least a few days to watch and identify a near-term market bottom.  And if the market wants to fall to secondary support, it will easily do that without us jumping in prematurely.  When it settles down, I’ll write up a list of which of our favorite buy-recommended stocks look most appealing at that time.

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Please send questions to

Crista Huff


Goodfellow LLC

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