Business News

Time to buy, but when?

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by Peter Switzer

The stock market will be going up this year, despite what you’re seeing now and so the trick is to know when. Of course, timing the market is very hard and some call it a mug’s game but if you can do it, it can really help your portfolio’s bottom line.

Personally, I’m itching to buy into this beaten-up market and the fact that our market is down around 10 per cent makes me even itchier!

That said, Lance Lai and his charts on my show last night showed little reason to believe a turnaround will happen soon. Lance called it right in April and even wrote a blog on this website entitled “Sell in May and go to Shanghai”, which is exactly what he did, as I saw him there when I was there for a speech.

My other favourite charts guy, Jordan Kotick from Barclays Capital in London, also predicted choppy trade until about July and regular readers know I have been waiting for a correction.

Well, it has happened here but not on Wall Street yet. The S&P 500 is only down around seven per cent since April and so there could be a few more downdrafts before a turnaround happens.

The basis of a turnaround would be, in a perfect world:

A Greek debt solution
Better-than-expected US company earnings in four weeks' time
Improving economic data in about two months time after QE2 has petered out
China looking like it is poised for strong growth.

On the latter, Wendy Liu, head of China and Hong Kong research at RBS in Hong Kong, advises going long China and she expects a big year for Chinese stocks in 2012. She advocates going long stock in July this year and that’s a promising sign.

Meanwhile in the US, the VIX or fear index shows US investors are not very spooked and the Put/Call ratio on the Chicago Board Options Exchange, which is a good forward-looking indicator, says a stock rebound is on the cards.

So, when do we buy? I suspect soon and even if the market goes down it shouldn’t be by much and then your rebound will KO the short-term losses.

I am going to wait for a while for my own investments but the finger is getting itchy.

Important information:This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. For this reason, any individual should, before acting, consider the appropriateness of the information, having regard to the individual’s objectives, financial situation and needs and, if necessary, seek appropriate professional advice.

Watch more from Peter on SWITZER TV.

Published on: Tuesday, June 21, 2011

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