Yesterday was another rough day for the markets. My crystal ball is not good enough to predict where a bottom will be but, so far, the fear about what could happen (e.g., a double-dip recession) has been worse than what is happening. Fear brings opportunities, so I would use the current weakness to consider rebalancing and look for bargains. At the very least, you should create a shopping list of stocks and ETFsyou would buy if they got cheap enough.
I always encourage investors to look at a variety of indicators. By itself, any single indicator can lead you astray. More importantly, many indicators sound like they would be predictive, but are actually not very profitable.
An example is the "death cross," which appeared on S&P 500 charts this week. The ominous-sounding event occurs when the 50-day moving average crosses below the 200-day moving average. For those of you who are not chartists, a moving average calculates the average price over a specified number of days, such as 50 days. The next day, a new average price is calculated based on the new set of 50 days, which now starts one day later than the last set. (Hence, the average moves one day forward.) This forms a series of dots, one for each day, which is tracked with a line on charts.
A death cross means the average price for the last 50 days is less than the average price for the last 200 days, a sign that the short-term trend in stock prices is negative.
This may sound somewhat scientific, but the event is not really as bad as the name sounds. A short-term downward drop in stock prices can be painful, but it does not tell you if stock prices will keep falling.