With the announcement from President Obama that GM is getting one last chance before bankruptcy, it is completely off of the most actively traded stocks today (top 25 across all US exchanges). Interestingly, there are six financial stocks and four financial ETFs that are on the most actively traded list.
With the markets up more than 20% off the early March lows, it’s hard not to get overly excited, but investors always need to keep their emotions grounded. While many of the fundamental and technical indicators I follow are far more constructive than they were heading into this year, suggesting the market is showing signs of “A” bottom, I still believe that those who jump head long into this market may find that the water is far shallower than they think.
The definition of a bull market is a market that is trending up. In technical analysis terms, an uptrend consists of a series of higher lows and higher highs. The current rally has run for 8 (practically) consecutive trading days so far.
Probably the biggest development in the commodity sector is the solid break of oil through its 50 day moving average (MA), which has acted as price resistance since crude’s peak last year.
Over the last few days, as stock prices have continued to rebound we have seen a significant number of longer-term ‘super bears’ reverse their gears and become bulls. The likes of Marc Faber, Robert Prechter, Doug Cass come to mind, as a few who have swung from the bearish to bullish camp.
With the world in a tumult and the global financial system on the brink, there has been one relatively steady beacon in the storm: gold. The gold price ended up 5.5% for 2008 as stock markets plunged around the world and is currently up over 4% in 2009.
For those of you who missed my article last week after the disruption of Financial Sense, I’d recommend reading it as today’s article is a continuation of my thoughts from my prior article.
For the past two years I have been firmly in the bear camp and the greatest risk I face is becoming a perma-bear and missing the turn in the markets. Thus, to overcome becoming too bearish I browse the data looking for signs of stabilization and a possible turning point in the markets and economy, and have recently found some signs of stabilization that a major bottom is forming.
The last bubble holding up the stock market has burst. The confidence we held in fiscal policy to swoop down and rescue the financial markets from the financial woes of last year – was for naught. I say this because there’s a correlation between the drop in the S&P 500 and the day our new Treasury Secretary advised us that there’s a plan (sold separately and details not included) on February 10th.
Before getting to the heart of today’s article I’d like to first provide the following definition:
Myopic: Unable or unwilling to act prudently; shortsighted; Lacking tolerance or understanding; narrow-minded; Lack of discernment or long-range perspective in thinking or planning.