After the awaited fed cuts are in.. How the markets will be in next few months. Anybody here who has idea about 2001 what happend when there is a big crash? I am not saying we are in the crash. But when it happens whats the next step.. Its going to be a few more selling and then halt? How it would recover> is this the right time to think about looong investment?
I think for long term investments, dollar cost average into the market is always OK, considering currently we don't really have an equity bubble in the US. The emerging markets look very extended... but who knows. From short term trading point of view, that is a totally different story.. it's a day to day thing, if not minute to minute.
No one knows the answer to your question, but my gut feeling is that after a bounce from the Fed move we will move still lower. I had a 1280 next target on the S&P and today we hit it. Note that there is very strong support in USD/JPY at 101-102 and we were in striking distance before todays whatever it was. I was expecting 101-102 in USD/JPY to correlate with about 1280 in the S&P but we got there without taking the USD down all the way. Note that that support is way back from Jan 2005 (see the weekly USD/JPY plot) I think the carry trade has been unwinding and that 101 USD/JPY level probably corresponds with an unwound carry trade. Of course we have to recognize that we are coming off the greatest real-estate-liquidity bubble of any of our lifetimes so it is entirely possble that we could break 1200 on the S&P before this is over. I guessing we will at any rate jerk around here for a little while at least and maybe see a continued bounce. So my only suggestion would be to keep an eye on USD/JPY.
just my 2 cents, I think this was a dead cat, short covering, bounce. We are testing lows again, and then lower. FED will cut rates again and we will get another bounce. I don't think there is anything the FED CAN do at this point except maybe temper the pain. We need a good shakeout. There is absolutely no science behind this prediction. Just a feeling based on a bunch of experience. Jay
if you are talking long term, does it matter if you buy here, or 50 pts lower/higher? http://finance.yahoo.com/q/bc?s=^GSPC&t=my
Reaction higher. Wherever that settles, trading range between that level and the low set by the lows today, until the next breakout, which is certainly months away. I'd guess March or April at the latest. Direction of the breakout I lean bullish: it's still an election year, and every monetary and fiscal stop you can think of is going to be pulled. The Dems already have an economic platform to run on, and so have nothing to lose by looking cooperative and like they're effective, whatever that's defined as, regardless of what happens for the rest of the year, while the Reps will be desperate for something to pull their asses out of this mess: two recessions while their party is in the White House is not the road to success.
There are three main components to price movement in the markets: Fundamentals, Sentiment and Technicals. Fundamentally we are breaking down, INTC disappoints, AAPL, all the financials (Also the financials typically lead the market up or down) The Sentiment is very weak I keep hearing recession and recently bear a lot. Technically we broke the 50 and 200 ema on the weekly S&P as well as the long term uptrend. My conclusion is the market is going lower sell rallies.
For long term, valuations are very attractive. You can get 2X leverage with DDM, without paying margin interest or options time decay. If you can wait some 6+ months now it's a nice moment to buy. The economy and stock market will get fine, once financials have writtendown most of their subprime losses. Unemployment is still quite low.
I'm not a big Fibonacci guy, but I watch the obvious levels because so many others do. They work better when they're near another potential S/R point: previous low/high, round number (ending in 50 or 00), pivot point, etc. FWIW, I think they work b/c they're self-fulfilling prophecies, not because traders follow them like in some "natural" way. Anyway, from the 2002 low to 2007 high, here are the numbers I came up with for the S&P 500 (cash): 38% - 1263 (close to 1250, a round number where many people expect support for whatever reason) 50% - 1170 61% - 1082 I'll watch closely as prices near those levels. Also, the July 2006 low around 1225 may come into play.