Stock Market Landslide Continues...
FUNDAMENTAL ANALYSIS
In this fear driven market, few people ever pay attention to any fundamentals except everything negative. Markets continue to slide today carrying with it the early morning buyers. Early signs of buying are quickly erased by a merciless and swift mob of sellers while short sellers laugh their way to the banks. Well, in all market conditions, there are always an equal number of winners and losers in terms of dollars and cents. There will therefore always be cryers and laughers. It is again difficult to attribute this fearsome correction to what Ex-Fed Chairman Alan Greenspan said about possible recession by the end of the year as global markets too lost over $1.8 trillion in a week. It was like the doomsday has arrived for the global stock markets. Well, corrections always make people feel like its doomsday and that there are no end to it. Normal traders should already be out and await a future rebound and sophisticated traders should already be in the short.
TECHNICAL ANALYSIS
No surprise today as markets extend their losses. All short term indicators still suggest a strong downwards momentum even though the Dow and the Nasdaq composite are both in their short term oversold condition. Well, as my mentor used to say, the Bulls take the stairs and the Bears jump out of the window. Both indices are coming up against the short term psychological support level that I suggested yesterday. This correction seems to reflect the same patterns we saw back in the May 2006 correction and with mid term indicators still showing a lot of room to downside, I believe we will see a breach of the short term psychological supports to test the respective 200MA support. Option traders should already be holding on to puts or in negative delta positions by now and join the rank of the laughers.
In this fear driven market, few people ever pay attention to any fundamentals except everything negative. Markets continue to slide today carrying with it the early morning buyers. Early signs of buying are quickly erased by a merciless and swift mob of sellers while short sellers laugh their way to the banks. Well, in all market conditions, there are always an equal number of winners and losers in terms of dollars and cents. There will therefore always be cryers and laughers. It is again difficult to attribute this fearsome correction to what Ex-Fed Chairman Alan Greenspan said about possible recession by the end of the year as global markets too lost over $1.8 trillion in a week. It was like the doomsday has arrived for the global stock markets. Well, corrections always make people feel like its doomsday and that there are no end to it. Normal traders should already be out and await a future rebound and sophisticated traders should already be in the short.
TECHNICAL ANALYSIS
No surprise today as markets extend their losses. All short term indicators still suggest a strong downwards momentum even though the Dow and the Nasdaq composite are both in their short term oversold condition. Well, as my mentor used to say, the Bulls take the stairs and the Bears jump out of the window. Both indices are coming up against the short term psychological support level that I suggested yesterday. This correction seems to reflect the same patterns we saw back in the May 2006 correction and with mid term indicators still showing a lot of room to downside, I believe we will see a breach of the short term psychological supports to test the respective 200MA support. Option traders should already be holding on to puts or in negative delta positions by now and join the rank of the laughers.
Labels: dow, fundamental analysis, fundamentals, investment, share market, stock market, stocks, technical analysis, technicals, us market, usa
posted by Jason Ng at 5:04 PM
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