Dow hits record, Big Deal
In my previous post I have put in my sentiment of today's markets. Bearish. But I have to admit that once the bulls are in they just charge. In fact they are trying to net in the bears and pull everybody with them. I just ask how long?
This wall street article gives you a pretty good indication. The Dow hit a record today. But where is the market - the S&P 500? For it to reach a peak it has to go uphill another 14.5%. Phew! would be tought aah! And the Nasdaq - needs to more than double to capture it's peak. So how should we see today's Dow record. I would say with a grain of salt. If not anything else it may be a trap. The Dow only has 30 stocks in it. It is just a symbolic index not the real one. And as you can see the real market has yet a long way to go for the peak.
So what I would suggest my readers. Don't get carried away with the Dow peak. Keep your eyes and ears open and run for the exits the moment you see or sense rumblings. The volcano can erupt anytime. And unless you are far off till then, it can engulf you in no time!
Keep in mind*we are in the fourth longest bull market since 1900
*economy is slowing
*housing is going to be a big drag soon on the slowing economy
*oil is low - but just needs one trigger to shot back up
The odds against any major upside are quite stark. Good luck.
posted by Adk @ 6:36 PM
2 Comments:
I like to read your blog, it is very informative, here is my opinion about the market.
Market always trade about future growth that is the reason stocks are anticipating, or discounting economic events months in advance for example home builder had climax run in June 2005, and housing was strong at that time. Inflation, housing all data shows that economy is slowing, fed stop rising interest rate and lot of analyst expect to lower interest rate in Jan 2007 that will help to boost economy.
But still there is some contradictions in market, leaders are not rising so fast, IDB 100 which mainly contain growth stocks is underperforming market.
I also don’t pay so much attention on DOW but I don’t neglect it because it is best "indicator" of public sentiment and investor psychology plays an important role in driving prices.
I am not an expert and might be wrong.
Bottom line is price and volume action of individual stock is the best indicator of Market.
Shriya
Thank you for the feedback. Appreciate your comments. There is no question that market is always looking ahead. And when the market is going up, especially in good volume, then it is futile to bet it going down. But eventually every run ends. And time tells us that it ends after a climax run. Looking at current conditions it looks to me that probably we are in that phase. Now how long it goes, nobody knows.
I myself follow IBD and I know that it's indicators are telling the rally is on and healthy. But their indicators turn when it is too late. Right now I am having a hard time justifying the current run. The market is seeing something that at least I am not understanding. And I think there are lot of people who are thinking alike. Here are few links -
technical
fundamental
Both fundamentally and technically the market looks overbought. Please share with me any reports or data that you have that gives a good picture of what lies ahead.
Thanks for sharing.
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