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Can Last Week’s Rally Be Sustained?
Is it a bull-market rally or a bear-market fake?
It came right down to the wire, but the Dow Jones Industrial Average ended the day Friday with its first four-day rally since November, ending the week with a gain of 9.0%. And despite that robust performance, the Dow was the laggard among the three major U.S. stock indices. The tech-laden Nasdaq Composite Index soared 10.6% while the broader Standard & Poor’s 500 Index edged it with a weekly gain of 10.7%.
Fuel for the rally came from several sources. Stocks had sold off sharply coming into last week. But then such beleaguered banks as Citigroup Inc. (C),…
16Mar2009 | Money Morning | 0 comments | ContinuedThe Anatomy of a Rally
Glimmers of hope for the economy have shown up over the last two weeks
As I have been writing in recent columns, investor sentiment had gotten extremely bearish and fearful, which is always the case at significant market lows. On the technical side, the major market indexes were extremely ‘oversold’ beneath their long-term 200-day moving averages. Short-selling had been at a feverish pitch.
However, once such conditions for a potential rally have been set up, what is always needed is a catalyst – some event, announcement, or a glimmer of improvement in economic reports – to convince short-sellers to begin moving to the…
Market Rallies and Rhymes: Prepare Yourself Now
Mark Twain said, “History doesn’t repeat itself, but it does rhyme.”
Right now, investors and traders are getting ready for it to rhyme again.
Earlier this week, the government felt the stock market was getting a bit too low again. Our great leaders delved into their ever-shrinking bag of tricks and pulled two of them out. In the process, they sparked the strongest rally since last summer when they stepped in.
Barney Frank, the House Financial Services Committee Chairman, told reporters he has spoke to the Securities and Exchange Commissioner and said, “I am hopeful the uptick rule will be restored within…
13Mar2009 | Q1 Publishing | 0 comments | ContinuedSentiment suggests a looming stock market rally
But is there enough fear to form a bottom?
Investor sentiment is an important tool in market-timing, often indicating an approaching reversal in the market’s direction. It is also known as a ‘contrary indicator.’ That is, investors are usually bullish and full of confidence by the time a bull market or major rally has gone on long enough to reach a top. In the opposite direction, investors are usually at an extreme of bearishness and fear by the time a serious correction has reached a bottom.
Sentiment is the clearest indication of why most investors fail to keep the gains they make…
12Nov2008 | Street Smart Report | Comments Off | ContinuedHere’s Why the Stock Market Relief of Late Last Week May Not Last
While investors remain extremely concerned about the volatility of the U.S. stock market, the weakness of the American economy and the uncertainty of the global financial markets, last week brought “slight” relief from the excessive panic of the eight-trading-session losing streak. Bear in mind that each new economic report, earnings statement, news report or trading session represents a new opportunity for fear and uncertainty to reemerge.
Fortunately, next week’s economic calendar remains quite light, although retailers may just weigh in with “doom-and-gloom” holiday predictions. Earnings season may be weak as well (with even more pessimistic outlooks), so investors should not overreact…
20Oct2008 | Money Morning | Comments Off | ContinuedWith OPEC Planning to Cut Production, the Decline in Oil Prices May Not Last
Oil prices have plummeted 24% from the record high levels achieved in July, but the sell-off that sparked a stock-market rally over the last four weeks may not last since the Organization of Petroleum Exporting Countries (OPEC) is already gearing up to cut production.
OPEC, the cartel that controls roughly 40% of the world’s oil supply, pushed its production to the highest level in its 48-year history in July after being criticized for doing too little as the oil bull went on a year-long rampage – causing oil prices to reach an all-time high of $147.27 on July 11.
The production…
18Aug2008 | Money Morning | Comments Off | Continued
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