Question: Some people think the market is at a low. Is this true? If so what should I do in terms of my stocks?

Hannah S.

Answer:

Dear Hannah,

Even the smartest economists and analysts find it difficult to call the low. But of course, they and many investors continually try to do so. We don't recommend that BuyandHolders attempt to time the market and we certainly cannot give you a specific date as to when the low occurs with any type of guarantee.

However, we can recommend that you follow individual sectors first, and then specific stocks within that sector second, to identify overall trends.

As we go to press, we know that the housing industry and much of the financial/banking sector have been fairly hard hit with poor earnings and negative news.

Whether or not either has hit bottom, remains to be seen. But we suggest you watch each carefully and notice when either group rallies into bad news. When and if they do, you can take that as basically being a positive sign, although not any type of guarantee.

Then, check the volume numbers of the major stocks in the sector that appears to be rallying. Do this for two weeks or even for a month. If volume each day exceeds the previous daily volume, the situation is probably a positive one and perhaps even an indication to buy shares of those companies within the group that are financially sound.

But in the process of studying out-of-favor sectors, don't overlook the healthy industries.

For information on spotting healthy industries, read our two-part series on Buying Safe Stocks. CLICK HERE & HERE.

Good luck!