We're back...

Hope everyone had a great holiday weekend. After a little break for thanksgiving I am back with some insight into last week. Do NOT think that the bulls are going to be out and running this week. Just because we were up last week does not mean that the bottom is in. It is not time to be outrageously bullish thinking we do nothing but go up from here.

That said, we are seeing some things that appear to be constructive. Here's why. Every bull market is where we move from a time of perceived uncertainty to a time of perceived certainty. The tech bubble was a time where we just KNEW that any stock with .com at the end was going to do nothing but make a ton of money. We KNEW that the mall was dead and that everyone was going to magically switch over shopping exclusively on line. Remember? That was a bull market. No one thought that the reality was going to be somewhere in the middle of shopping on line and shopping at the mall. It was a time of perceived certainty. It wasn't true certainty about the future, but it felt like it.

Flash forward to September-October 2008. We didn't have a clue what these financials had on their balance sheets. We still don't in some cases. We had no idea what was the next financial company to implode. We weren't sure of the consequences. We weren't sure that we were going to have a financial system. We weren't sure if we were looking at an economic slowdown that makes the Great Depression look like the good ol' days. The list goes on but you get my point.

Now here we are in December. We have seen some companies collapse. We have seen a complete seizure of the credit markets. We have seen the effects of government capital injections and other inverventions. We are feeling more sure that things are not going to be financial and economic armageddon. But we are not in rip roaring bull market territory. Now is probably the time to buy some stock positions that you feel comfortable owning for a long time in companies that you feel will last at least another 10 years.

You might want to consider financials that the government will not let fail under any circumstances. BAC, C, WFC, JPM, USB, are some names you can add in very small chunks. Look at some of the geographically diversified blue chippers. JNJ, BA, MCD, CAT, to name a few. They have been beaten down a lot with this market. With a very long time frame - 5 years or so - you will be fine. Buy the stocks. Sell covered calls in the meantime. Set up long term calendar spreads. There are quite a few things a long, long term constructive investor can do in this market.

Overall, we will definitely head lower short term. We moved up too far too fast. The moves lower should be constructive times for a longer term investor. Remember I said we might see 7,000 on the Dow but probably not 5,000? I am sticking with that. 7,400 is the short term low. Look to that level or around there for support. If we head much lower after a retest, look out below. The 5,000 Dow might be on the table. Until next time, stay low risk.