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Saturday, June 13, 2009

Today's Stock Market Is Interesting

WOW, today's stock market is very interesting and full of fun. Why did I say that? Imagine this:

Fundamental View of the Market

  • Valuations (bankruptcies, ailing financial sectors, ailing auto industry, real estate sector continuous to be battered, etc. etc.).
  • If you then look at the economy of the USA (dollar falling, jobless claim hitting all time highs, nation debt ballooning, treasury in money printing spree which will cater inflation, bailing out of ailing companies, budget deficit going all time highs also) the view is still very bad (although some economic figures are starting to look less bad than the previous month).

Technical View of the Market.

  • Summation Indices on bearish moods
  • Momentum Oscillators are mostly on the hyper extended overbought zones.
  • Stock Prices are meeting and breaching falling long-term moving averages.
  • Chart of bell-weather indices are in a rising wedge pattern.
  • Although the bullish percent of major indices are still in the bull zone.

Above conditions suggest a down market, if not crashing. But look, the market is going up. Bullish traders are celebrating and singing the phrase “Bull Market Is Here Again”.

Why is this happening? This is because of the government’s effort to counter negative forces by spending billions of dollars to pump prime the economy to lift the present Great Recession and avoiding the Great Depression just like in 1930s.

Another question: “How long and how much power (in terms of monetary arsenal) does the U.S. government holds in order to withstand and counter another wave of economic pressure when the tail of this economic hurricane begins to attack?” I don’t have the clue and answer to this but for sure: In the End The US Government will Win. It might be a hard fight but surely, US will win.

This is what I call “A Very Challenging and Full of Fun Situation” because it requires for an investor or a trader to be on his feet to make profits. It requires monitoring of down to the last details so as not to be taken by surprise by the market. Any investor or trader who blinks then he is finished. Very Interesting, isn’t it?

For me I am playing the market right now in WYSISWYG (What You See Is What You Get) attitude. When I see a bullish mood then I’ll go long, when the bears dominate, I go short. In other words, I am emptying my mind on any pre-conditioned or pre-conceived idea(s) on the direction of the market. What the market gives I accept.

What’s yours my friends?

Happy investing.

Raul Estrelloso, Basic Author