After all this time that I’ve been saying that there is no good reason for the DOW and the rest of the markets to be as high as it is, we can see from the comments from the Federal Reserve, we are not bouncing back from the recovery as they and the Obama Administration have been trying to feed us for the last year. The Federal Reserve states that the economy is not growing as fast as they once thought. To make matters worse, the dollar is at a fifteen year low against the Yen.
In the first forty five minutes of trading today, the DOW is down 200 points. A sign that that investors and brokers are waking up to the realization of the fact that we are not out of the woods yet. NASDAQ is also down 54 points in the same amount of time. All together, each of the three idicies have lost roughly 2% in less than one hour.
Of course I expect the markets to jump back up, but that will be from the market makers trying to make some more profits on this sell off. The DOW has moved up to 10,700 i the last week and there should be some profit taking, but this drop is not going to end with a few people taking their profits. I feel that some will start weening out of the stock market in preparation of the correction we’ll see in the second half of this year.
If you are still looking for some trading action, because you love the game of the markets, I suggest that you learn and start shorting stocks and the overall market.
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Economy,
Federal Reserve,
Stock market for beginners,
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The Federal Reserve Chairman Ben Bernanke stated today that the economic recovery is sustainable. Along with the news of retail sales are up in the last month, one would think that this is the time to get in on the stock market. Well before you do, you need to be aware of a few things first.
The stock market (Dow Jones Industrial Average) has reached a new twelve month high after climbing 12% over the last two months and over 40 % year-to-date. Those are some great impressive gains, but does that mean that the markets will continue on this upward path? Well that’s anyone’s guess.
The last time the Dow was at these levels along with the S&P sitting at 1200, was in September of 2008. You have to ask yourself, “What was the condition of the economy in September 2008?” I did some research into this issue and found that this might not be the time to invest in the stock market.
In Sept., 2008, unemployment was at 6.2%. The foreclosure rate hasn’t slowed down. It’s estimated that 1 in every 538 homes are in foreclosure as of march 2010. The Federal reserve has printed so much more U.S. currency that it’s not even funny.
My point being that you should be waiting for a healthy pull back (8%-10%) before investing any capital.
You also have to look into the future of the economy too. Economics believe that the unemployment rate will still be at 8.4% at the end of 2011. Home prices will remain at near flat levels for the next two years. They also expect the economy to only grow 3% in 2010.
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It’s that time of year again that comes every three months. That’s right, it’s time for earnings reports. Alcoa (NYSE:AA) is the first company to come out with their results for the second quarter for 2009 (actually it’s just that they are the biggest company to report). Alcoa will release their report after the closing bell on Wednesday July 8th.
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After last week’s debauchery, who really know what to expect. I not expecting anything good from any one company, so I will be watching the companies that I favor to buy on the dips. I’ve again back out of a lot of the positions I had in the past couple of weeks, so I’m in a good position to pick up some of the companies I was in at a lower price. Unfortunately, I’m not all that comfortable with the way the government and the Federal Reserve are handling things right now, that I just might sit out for the next month or so.
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Of course with me doing that, I just may miss out on some great moves, but when in doubt, sit it out.
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On Thursday the DOW lost 223 points. It started off bad in the morning and was pretty much steady all day until the end when the rest of it fell out. The whole week was trading on light volume, which makes it hard to really see which way the markets could have gone. It’s not easy to get a feel for the markets during a holiday week.
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I will wait until tuesday to get a feel for the market tread, but the way the markets have been lately, it’s doesn’t stay one way or the other for long. Take your time and do your research carefully, like you should do all the time.
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