Successful Retest?

Last week's action felt like we've put in a tradable bottom for this year.  We hit the low point two Fridays ago and retested it midweek.  If we can get a little more buying action early next week then volatility should go down and a base should form from which we can rally into year end.

The combination of uncertainty and forced liquidations have created an air of fear and panic.  No one has a good idea of when the market will stop falling as most every market pro thinks it's time for a reflexive bounce.  But, day after day we get more and more selling.  When we do get a pop up on the indices the market doesn't hold it up but instead pounds and sells it into the closing bell.  It's erratic to see so many stocks let alone market indices make 5-10% moves in one trading session.  All this has created a trader's paradise, but for those who are longer term investors it's pretty grim when you check on your portfolio and see monster percentage declines.

So what should investors do now?  For one thing, they should ignore the headlines but, more importantly, start thinking how they can profit from such crazy dislocations in the market.  Start pondering what the future will look 5 years from now.  Do you think the US will remain globally competitive or will the BRIC countries stampede over the western hemisphere?  Do you think the USD will remain weak given the huge cash infusion the government has promised (and may promise some more) the economy?  Do you think that multi-nationals with strong balance sheets can continue to take share in foreign markets?  Do you think the entrepreneurial spirit of Americans will somehow break thru with new technology, new ways of doing business that will create value?

Some companies I'm observing: MCD, KO, SBUX, TASR, DE, AAPL, RIMM, FWLT, NOV, ZMH, DEO.