Don't Believe The Pundits - Leave Stocks Alone For Now

Don't you get a touch irritated when you see pundits trying desperately to talk up stocks as you watch their prices sink ever lower? At what point do you just stop believing them? There are many situations in life where it pays to look at what people do, not what they say. Investments are a perfect example.

The FTSE recently failed to even bang its head on the 100-day moving average, never mind reaching for the stratospheric 200DMA. It has since come down to break the SAR and MACD looking red.

S&P 500 looks even worse. If anything, this is time for another round of shorts.

For the stock investor, this is absolutely not the time to do anything other than gamble. If you find a company chart that looks positive, then go for it, but remember not to buy anything from broker recommendations - before you even read the review or hear the interview the price will have moved already.

This is why my aim here is to show how some fairly simple indicators can be your friend, even for people who see themselves as investors rather than traders. I will not be giving daily advice but slowly going through how to apply indicators to investment strategies. The last 10 years have seen virtually no returns from the world's stock markets. Compare this to holding bonds, or even compounding a deposit account.

The really big indicator that we are very much in a bear market is the 200DMA. For the FTSE this is around 5200 and for the S&P at about 1250, and we are well below both of these. We've just gone through a few weeks in which markets have desperately tried to bounce off the last lows, but looks as if we are going to retest them.

Don't believe those people who keep calling "bottom" every time we hit a new low. Of course, they will be right, eventually, just that nobody knows when, which is as useless as not having read the advice in the first place. Trying to call a bottom is often seen as trying to catch a falling knife. A better strategy is trying to catch it off the first bounce. I haven't written much recently but am coming back on stream, so to speak, so let's watch closely what happens this time.