It is not possible to know what level is the right level to enter the stock market and various analysts, gurus, journalists and economists have been weighing in this week as the market closed at a one month high, with some folks even becoming downright optimistic.

I might add that the true level we have reached is one of amusement to me because we all are trying to call the market bottom. I myself have entered the fray trashing Nostradamus along the way. This is as much hope, as fact, and folks are looking for clues everywhere.

Some are looking at historical precedent for clues. Technical analysts are combing their charts for patterns of market behavior. The uptrend has to be sponsored to some degree by short covering and momentum traders too.

Positive news was reported by Wells Fargo (NYSE: WFC) which said on Thursday, April 9 that it expects to post a record first-quarter profit of $3 billion, up about 50 percent from a year earlier, due to better-than-expected performance from Wachovia (acquired in December) and a strong performance in mortgage lending. This was all it took to send the market higher even before anyone has actually sifted through the quarterly report for themselves -- not due out until April 22.

I am not surprised that the market is up and I have been putting cash to work for the past six months; but not all at once; not without recognizing that I might be early; and not without a plan. This has included buying WFC most recently at $12.00 and selling naked puts at strike prices of $7.50, $9.00 and $12.00. My most recent post on the subject from last month was Chasing Value: The safest bank in the U.S. -- Wells Fargo.

If you have missed the recent market pop do not fret and do not chase it because it could change direction as many have called this a bear market rally.

What might be most prudent at this point, if you believe that the volatility will continue and the stock market will not see true lasting improvement for a while, is to segment the money you want to put back to work into four or five tranches and invest on a regular basis dollar cost averaging back in over time.

Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture & planning firm. He writes the columns Chasing Value and Serious Money. Disclosure: I own shares of WFC and I have open options.

Sunday Funnies: The bottom guessing game originally appeared on BloggingStocks on Sun, 12 Apr 2009 18:40:00 EST. Please see our terms for use of feeds.

The market has been flying high with the DJIA reaching a milestone closing at 8,017.59 last Friday, April 3. However, the euphoria should not be taken as an all-clear sign to jump in with both feet. I do believe we have reached an inflection point, but volatility still rules the market and the world economy.

A few weeks ago, on March 9, when the DJIA closed at 6,547.05 I suggested the market had reached bottom. It now looks like that is a real possibility. My rationale was straightforward. The point of maximum fear and capitulation -- "The world is coming to an end!"

If you were out of the market from March 9 though April 3 you missed a gain over this period of 22%. Students of market history might remember that 90% of the growth in the DJIA has occured on 7% of the days. I do not mean to suggest that the money you need to live on should be left in the stock market at risk during these troubled times. You do need to set that aside in cash or a diverse pool of financial instruments.

If, on the other hand, you are investing for your long-term needs and you pulled everything out at what might have been a low point, you might have just blown it. Therefore, you might consider returning to the market gradually. If we see our currency diluted, do you really want to be in all cash or treasuries? See: From gold standard to no standard: 'Lightspeed inflation'

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I am pleased to say that I have been buying stocks through the quarter at what I considered bargain prices while also cashing in on the palpable fear and negativity I perceived by doing naked puts.

On March 11, two days after thinking we'd hit bottom, I went even further posting Is the stock market spring loaded? Could it move 3,000 points higher now? -- do you think there could be another 1,500 points left in this push upward?

Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture & planning firm. He writes the columns Chasing Value and Serious Money.

Did we reach bottom? Nostradamus has been punked! originally appeared on BloggingStocks on Mon, 06 Apr 2009 12:30:00 EST. Please see our terms for use of feeds.

Today, I want to examine what others are thinking about this market.

I read Peter Brimelow's refreshing column, and on Monday he summarized the prognostications of some of the popular letter writers:

"Astrology oriented Crawford Perspectives ... up 50.75% last year, said, 'There are evidences that our whole system is melting down, and that could certainly disturb the normal cyclic flow. We believe that will NOT happen All At Once or Right Now! Even a drowning man gets a last breath or two before going down for the count.'"

Continue reading Today's technical outlook: Bear market rally could end as quickly as it started

Today's technical outlook: Bear market rally could end as quickly as it started originally appeared on BloggingStocks on Wed, 11 Mar 2009 09:30:00 EST. Please see our terms for use of feeds.

Emotionally, it's felt to me like the markets have made their final lows. However, I've said that to myself several times in the last few weeks. Truth is, though, we most likely haven't.

Most of the experts I've listened to or read believe this to be the case because they are waiting for a big charge in the CBOE Volatility Index (VIX). According to this article, we're not even close to a Vix value that would indicate an upward trend is around the corner. As I write this, the Vix stands at around $23.50. Many believe it needs to be something like 50% higher to indicate the towel has been thrown in by traders and investors, thus signaling a potential bottom.

This is tough on the investing psyche. People are looking at stocks like Citigroup (NYSE: C), Disney (NYSE: DIS), Coca-Cola (NYSE: KO), and General Electric (NYSE: GE) and saying to themselves, "How much lower can this go, this has to be a bottom now!" Nope. Volatility is king of this domain, and it will need to spike before institutions and hedge funds believe that it's time to put cash on the sidelines to work. Until this happens, fresh 52-week lows may be the order of the day for a long time.

Continue reading Does it feel like we've bottomed out?

Does it feel like we've bottomed out? originally appeared on BloggingStocks on Wed, 09 Jul 2008 15:33:00 EST. Please see our terms for use of feeds.

An earlier post today noted that indicators are lining up for a possible bottom. The posts also mentioned pundits calling their targets on the indices. I have no idea where the market bottom is and anyone who tells you he does, is full of it.

However, it is almost a certainty that whatever the actual 'true value' is in terms of a bottom, we investors -- as a group -- will overshoot that mark. It is only natural and it happens at both market tops and bottoms.

From my perspective, the market will not "self correct" without multiple positive reversals of fortune from major companies and institutions. Time for the Federal Reserve to step up to the plate and take a swing! I believe the Federal Reserve can cushion our economic blow, but the U.S. Federal Reserve Bank can no longer affect the national economy as it once did because our economy is an ever decreasing percentage of the global economy.

Those of you who are new to BloggingStocks can check out my other stories and read Chasing Value or Serious Money to find more potential opportunities and verify my track record as well -- INCLUDING ANY BAD CALLS.

Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture & planning firm.

No doubt -- we will overshoot the market bottom for sure originally appeared on BloggingStocks on Thu, 16 Aug 2007 14:15:00 EST. Please see our terms for use of feeds.

Indicators lining up for possible market bottom this morning originally appeared on BloggingStocks on Thu, 16 Aug 2007 10:44:00 EST. Please see our terms for use of feeds.