Devils Come Back...

US dollar dropped the most in more than a month, gold surged the most in more than a month, oil rebounded off a significant support level, PPI surged by an unexpected amount, housing starts disappoints with sharp decline... all in one day. The devils all came back in one day like the Legion. As a result, the Dow dropped 130.84 points today for a second consecutive day. Tomorrow's crude oil inventories would certainly be an important one for crude oil price as a lower number would certainly give oil the catalyst it needs to follow up on its gain of today. However, such a sudden and coordinated move from equities back into commodities really does make it sound a little fishy.

The short term bull trend remains intact for the Dow... just barely. With volatility (see VXO) still this high in the market, it is certainly not unusual for the Dow to make high frequency, high amplitude parabolic move in any single direction. However, the Dow is now at the bottom of its short term bullish channel. If it fails to rebound tomorrow, the short term bull trend will be broken and the primary bear trend would continue.

One quick note here: technical analysis is not perfect! If there is a perfect method of analysis in this world, those big investment banks would not struggle with billions of losses this past year (yes, why invest in subprime loans when your analysts can give you 100% accurate prediction and analysis on the stock market, right??). In fact, if there is a perfect method of analysis in this world, its effectiveness would immediately be eradicated as investors take opposite sides to arbitrage such a move. In fact, if you think the analysts in those big investment banks are so powerful and can make 100% analysis, why in the world are they still working for those banks? You make money from the stock market because someone else somewhere made a loss. Only when investors continuously take boths sides of a trade does the stock market exist! Which means that the possibility of loss ALWAYS exist in the stock market no matter what method of analysis you use and it is this possibility of loss or "RISK" that you are rewarded for participating in the stock market! All I do here is express my opinion on the market using the simplest language I can master. I do much more complex technical and fundamental analysis but they merely support the opinions that I make here and being a free blog acting as my diary on the stock market, I do not see the need for being that comprehensive. I hereby ask that those of you who do not find my blog of your liking to STOP COMING TO MY BLOG. Those of you who finds my opinions on the stock market useful, I will always do my best to provide you with the best guidance possible.