Stock Market Analysis

Sunday, November 27, 2011

Welcome Back From Thanksgiving!

Well, this year's Thanksgiving leaves little to be thankful for the stock market as investors and traders scramble for safety ahead of the holiday, leaving the market with the ugliest two weeks drop since the July correction. The Dow dropped a total of 4.7% during the short Thanksgiving week alone as investors rightfully stay away in case of any bad new arising from the Euro zone through the long holiday. Yes, the Euro zone continues to be the toxic of global markets and until the toxic is cleared (perhaps with the dissolution of the Euro?) with a painful and significant hit to world markets, I am afraid the market cannot find real strength even if the US economy continues to grow. Interestingly, investors actually started reallocating back into equities last Friday, raising bond yields across the board significantly. Perhaps bond yields are now low enough to consider taking some risk? On the weekly charts, the Dow still look barely hanging on to a bullish reversal pattern but another negative week this week will destroy the pattern and perhaps lead the market into new lows and a new intermediate bear trend. Yes, this is uncertain times that defies precise predictions. Two things are certain, volatility and a slight Bearish inclination in sentiments.

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