IRA Investing: Getting Closer To a Bottom

I'm afraid we are going to see more and more of what we saw last week. Members of Congress were grilling hedge fund managers one day and then insulting the gentleman in charge of organizing the TARP the next. Henry Paulson was changing the rules of the big bailout as politicians debated whether to throw some cash at the auto industry. I want to know when the members of the House and Senate will have their turn in the witness seat. Only then will we be able to assess who is truly responsible and should be held accountable.

Meanwhile, the stock market stayed on its downward trek as investors tried to make sense of the economic outlook and what effect the political meddling will have on our financial future. I think it is safe to say that the market is not encouraged by what it has seen so far. Investors are trying to tell anyone who will listen that bailouts and phony stimulus plans don't work, but I don't think many politicians are listening.

I continue to believe that we are going to end up inflating ourselves out of this problem, but inflation will create its own set of victims. It doesn't have to be this way, because we could take more positive approaches -- like lowering taxes and improving productivity -- but we seem to be on the wrong fork in the road.

Amid the chaos, my market indicators continue to improve. I was working last week on attempting to identify stocks to buy if the market continues to move lower and my indicators reach bullish extremes. It is still possible, of course, that the market will hold near current levels and continue to build a base while these economic problems work their way through the system. Given the extent of the damage, the base-building scenario would probably take several more months.

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At the time of publication, Moore was long Conmed, Lincoln Educational, Super Micro Computer, Smithtown Bancorp, Sybase and USA Truck, although positions may change at any time.

Richard Moore, CFA, has 40 years of experience in various facets of the investment business. He has been employed by banks, mutual funds and investment advisory organizations during his career and has also owned retail and service businesses. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Moore appreciates your feedback; click here to send him an email.