Stock Market Heading Down or Up ?

How to Trade Stocks for Beginners - How Far Can the Stock Market Drop?

The DOW is down another 430 points to 11,011 after being at 12,600 just a few days ago. But how far can the markets fall? Some traders think we might be heading back to the lows of March 2009 whereas others think this recent fall represents a good buying opportunity. So what's a trader to do?

First of all if you are a beginner this is a very dangerous time to be considering buying stocks. It is not a good time to be a hero, or as Art Cashin likes to put it "it is usually the second mouse that gets the cheese". So don't stick your neck out unless you are absolutely certain what is going to happen next. Don't forget that Standard and Poors have just downgraded US debt for the first time since 1917 !

For one take on what may happen take a look at Oscar in the following video (if you are in a hurry you can skip the first five minutes). He is not convinced that the markets are as bad they appear to be, and points out that we may in fact be at a crucial support level, if this level holds then we may soon recover from this recent drop.

Professional traders themselves don't know which way these markets are headed - some saying we might rocket back up and some saying we plunge even further today. So very risky trading times!

Personally I am rather pessimistic and am waiting for the markets to fall even further - but Oscar makes an interesting argument and I will be watching market developments with interest over the next few hours and days.

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