Posted on August 27, 2009 by Adam Pichette

About a month ago, every other article about the future of the stock market referred to doom and gloom. Even after rebounding from lows in the 6000s up to highs in the 8000s, commentators felt that we were headed back to 6000. What happened? One month later and the market has risen near 10,000, a level that hasn’t been seen for about a year. It seems every piece of news about the economy is good, pointing to higher movement for market indices. What about the doom and gloom articles? They seem to have been replaced to an extent with articles about dow 10,000 by year end. A valuable piece of advice to take to heart when the market is viewed as bearish or bullish, when everyone else is buying, sell, and when everyone else is selling, buy. This would have made you a killing if you were brave enough to buy stocks in early March of 2009. You would have seen your portfolio gain 50 percent if you just bought S&P deposit receipts. Had you bought Bank of America, you would have seen a 4-500 percent profit, as it has risen from $3 to $18 in just 6 months. Now that everyone seems to think that everything is a buy, it would be wise to play with caution, perhaps buy some insurance. The volatility index, known as the VIX, is a good insurance policy for potential trouble ahead. Just be smart and don’t get caught up with all the hype, as much as the economy may be recovering, the market plays on technicals and cannot defy all of them.