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I mentioned in a earlier thread how the economic recovery will form of type of pattern, be it the "L", "U", "V" or "W" shape. I also mentioned that as of 6-12-09, the pattern was very much a "V" with the recovery side being at the eight month level. The trend could continue upward or could crest and head back downward to retest previous lows or somewhere close to the low.
I am starting to wonder if we may be early cresting on the recovery and moving from the "V" to the "W" pattern? The market indexes (^RUT, ^DJUS, "^RUI, ^GSPC & ^DJI) were all showing postive annualized returns for the previous eight months. With yesterday's drop and today's likely close around 8500+/-, the eight month annualized returns for these indexes is negative. VIX and VXX are both going back up which indicates increased volatility (and fear) in the market. A good day tomorrow could reverse this and we continue in the V pattern. But, on a whim, I did take some mutual fund profits off the table even as I went long on FAS.
(Even as I type, the market just jumped up 30 pts and my FAS is showing profits. Love this trading thing!)
My guess (and it is a guess) is that the market is going to trade in the 8100 - 8700 range for the next few months. IMHO, the recovery from 6500 to 8000 was more about correcting the original panic selling. It is going to take some real recovery from the recession before it pushes throug the 9000. Right now, I don't see anything that will drive it back below 8000.
My guess (and it is a guess) is that the market is going to trade in the 8100 - 8700 range for the next few months. IMHO, the recovery from 6500 to 8000 was more about correcting the original panic selling. It is going to take some real recovery from the recession before it pushes throug the 9000. Right now, I don't see anything that will drive it back below 8000.
Of course, I could be completely wrong too.
I agree with your assessment and I look to the 8100-8700 range as being likely too. This will create many trading opportunities. I see a lot of "desire" to get back to normal, but government headwinds are keeping a lid on serious recovery. The stimulus plan, the UAW taking over GM, the liquidation of Chrysler, the cap and trade tax, the health care plan/tax and the list goes on. It seems as soon as we get accustom to one "crisis', another "crisis" pops up. There are many, many reasons to be weary of this government. And this is dragging on the economy.
And just now, Brian Willaims is reporting on the "Global Warming". Yet another scamming of America. Let's see, too much rain in one part of the country combined with not enough rain in another part is due to GW? And the winds blow in S FL because of GW? All the predictions of global warming are just that, simply BS predictions. Yet another "crisis" that should not be wasted. Never mind. Wrong forum.
Back on topic
Quote:
Right now, I don't see anything that will drive it back below 8000.
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the market was growing a bit steep, it needs to consolidate, but... that could take one of many forms...
I wonder how the news of 'trading restrictions / increased governance' is gonna look tomorrow...I don't expect it will be GOOD news, but the market might respond any number of ways. Also 'end-of-qtr' coming up + summer doldrums.
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