The stock market is deeply oversold on a short-term basis, so we will probably get a short-covering rally the next day or two. A short-covering rally however won’t tell us if the correction is over. We will just have to wait and see what follows that rally to make a reasonable guess about the near-term trend. At this point, the stock market has shown enough weakness to be of concern, but junk bond and many other bond/debt funds have held up quite well -- but we should not become complacent. If the stock market correction continues, junk bond funds are almost sure to follow. We are paying close attention to our moving average stops and are prepared to act if they are penetrated.
What Does Moving Average - MA Mean?
An indicator frequently used in technical analysis showing the average value of a security's price over a set period. Moving averages are generally used to measure momentum and define areas of possible support and resistance.
What Does Stop-Loss Order Mean?
An order placed with a broker to sell a security when it reaches a certain price. A stop-loss order is designed to limit an investor's loss on a security position.
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