On the Sidelines for Thursday

09/18/2008 12:00 am EST

Focus: STRATEGIES

Tom Busby

Founder and CEO, DTI

As I stated in an article on this Web site on August 19, 2008: “In my mind, it is simple; the e-mini S&P cannot hold water above the 1300 mark, a pivotal point. We posted a low just a few weeks ago on the ES (E-mini S&P) at 1200, which acts as a swing term bottom until that low is broken and held. To me it is that simple, why make it more complicated?”

We are unfortunately now below that 1200 number. What now? That is the million- dollar question. There are many pieces of advice out there, some good and some bad; it just depends on what theory you subscribe to. One thing to remember, no one likes uncertainty, especially the markets. That is as simple as I can put it. To me, it would be prudent to look for certainty and stabilization to come back into the market before you begin investing again. Bottom fishers get eaten by sharks; those who are patient get paid and keep the hair on their head.

The fact is, assets were and are grossly overvalued, and that is the consumers’ fault; but that does not mean that all businesses are worthless. Many still have their buildings to auction off at the very least. Stay on the sidelines—there is a time and a place for risk, if you must take it. Now is not that time.

By Tom Busby of DTITrader.com

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