Major stock price indexes firmed slightly on Monday, consolidating last week’s losses. Indexes closed below their 50-day simple moving averages on Friday 1/22/10, which is bearish for the short-term trend. Still, all indexes remained well above their rising 200-day simple moving averages, which is generally considered to be bullish for the intermediate-term trend.
The market appears to be working off excessively bullish sentiment registered earlier this month, a process that could last from a few days to a few weeks.
Fortunately, we don’t have to be too concerned about the day-to-day volatility in the stock market since we are now primarily invested in low-volatility bond/debt funds. It is not that these funds are likely to trend up while the stock market trends down, but rather, that these funds tend to change trend direction slowly, allowing us more time to make logical, reasoned decisions.
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