We are there again ! Physcological resistense/support level of 1300 on S&P 500 index. We faced this at 1200 level in 2010. Market traded in a pretty tight range before hitting 1200 in April 2010. It shot to 1220 on April 23 and then started its roller-coaster ride all the way down to 1022 - a drop of about 200 points by July. The climb back up was also a roller coaster ride, when bulls pushed the market up defying all fundamentals and technicals. We had a first close of S&P 500 index above 1300 in 2 years on Feb 01, 2011 after flirting with it for several days. The very next morning we saw the index dropping 0.27% to close at 1304.03. It tried to creep up several times during the day but finally landed in negative at the close.
We have negative circumstances as in April 2010. Geo-political tensions in Egypt and middleeast, 'Now Ignored debt problem of Europe', Inflation worries in the BRIC nations, Floods in Australia, Snowstorms in the US and the monthly Job-report by end of the week. S&P 500 weekly RSI is already overbought and is above 70. UK economy has contracted in Q4 2010. With government cutbacks looming and Inflation on the rise in Europe, are we sitting in a roller coaster at the top ready for a free fall ? Another 15% - 20% correction caused by combination of factors and global events?
With falling trading revenue in big banks and stricter regulations coming, its just about time for them to book some profit for Q1, 2011 and buy again at the dips - after all, profitable stock market trading is about finding a bigger fool than one's own self ! And it is a traders market and not investors market.
Enjoy the ride !
Wednesday 2 February 2011
Wednesday 8 December 2010
Where are World Stock Markets Heading to Just before end of 2010?
European Sovereign Debt worries, Berlin's rigid stand on its role in bailout of troubled EU economies, Overheating of Chinese growth engine, inflation woes in India, Tensions in Korea, Obama's growing unpopularity, trouble with the Euro - where is all this taking world markets to?
Will the Santa Claus rally in world stock markets, specially in the European and the America fade as we enter into 2011, after all, these economies are essentially on a life support system. Printing money is not the solution, specially without the assets to back it. We have already had the tasters of the withdrawl of loose fiscal and monetary policies. Slight possibility of rate increase plunges the markets. Will 2011 mark exodus of funds from high return markets to the US stocks resulting in growth imbalance between emerging and developed economies - this time developed economies growing (at least momentary pseudo growth for few quarters) at cost of Emerging Markets?
Will the Santa Claus rally in world stock markets, specially in the European and the America fade as we enter into 2011, after all, these economies are essentially on a life support system. Printing money is not the solution, specially without the assets to back it. We have already had the tasters of the withdrawl of loose fiscal and monetary policies. Slight possibility of rate increase plunges the markets. Will 2011 mark exodus of funds from high return markets to the US stocks resulting in growth imbalance between emerging and developed economies - this time developed economies growing (at least momentary pseudo growth for few quarters) at cost of Emerging Markets?
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