After the selloff of the past few weeks, the market was very oversold, so the bounce wasn’t a complete surprise. Of course, the severity of the bounce WAS a surprise – at least to me – and it’s tough to tell what happens next.
The most likely scenario is that the Dow works its way back to resistance. But, if that happens we’ll have the reverse situation of a market becoming very overbought, and primed for at least some sideways action at old highs.
In any event, now’s a good time to just watch and react rather than guess.
I’ve suffered with my oil stock holdings, but perhaps there’s a glimmer of light. While oil itself keeps dropping, oil stocks have started bouncing. Exxon Mobil (NYSE:XOM) is a great example, and it looks like a double-bottom has been put in. It’s a little overbought right now, so wait for at least a small pullback before buying.
If the Sony (NYSE:SNE) situation reminded us of anything, it’s that cybersecurity is a growth industry. There are a number of companies involved in that arena, and Cisco (NASDAQ:CSCO) is a good one. I think the stock has a ton of upside.
Back next week to see if Santa brought us gifts…or coal.