Is it a bull market?
On Friday 7 August 2009, the Dow Jones Transportation index registered its highest close of the year. Apparently from a (Dow Theory) technical standpoint this means, we are in a bull market as all three requirements have been met. According to the FT (Financial Times) this doesn’t mean it’s time to buy. Wait for a correction, and buy on the dips.
As a virgin trader still deep in bedtime stock market reading, this is all academic, as I am still not ready to risk the real money. My mantra is to watch, wait and learn at least for the time.
v
From what I understand it is fragile. Volumes are thin. So it may come back to bite.
Stevie
This morning they they had a technical analyst who confirmed the views I have expressed about the current market rally being as a result of thin volumes – he said they were the thinnest for five years. He compared the current bear run bounce with similar trading patterns in past recessions and concluded that the bounce will run out of steam this Friday. That is very precise but the guy who followed him on the wireless said he agreed there would be a realignment of the market but not exactly on Friday.
I have been convinced this up tick has been unsustainable and I think if you are going to buy for real you should wait until this small bubble pops.
Trader
Trader,
I was slowly coming to the same opinion over the weekend. Watch and wait.
A virgin
Its all about low trading volumes, usually associated with a temporary blip in a longer bear market rather than a genuine recovery. This is no recovery?
paul – Trader blimp
Virgin,
It is difficult to stay on the sidelines at times like this but you are, I think avoiding involvement in a feeding frenzy, panic buying.
At these times the market is like an auction where people lose reason – I have been to auctions where people get caught up in the hysteria and buy second hand items for double the price they would pay for new.
The Trader
Trader,
I will be waiting until this current feeding frenzy stops before I press any buy buttons. It looks like investors are piling into all sorts of stocks at the moment .
A virgin must not take any risks. Wait and see what happens next week.
V
v
I think they are delusional but they are rich and I am poor. All the news today is about France and Germany emerging from recession – it is simply not true. A recession is two consecutive quarters of negative growth so surely being out of a recession requires two consecutive quarters of positive growth? But no one wants to be rational about it.
The FTSE fell 3200 points from peak to trough. It has now recovered 2000 points from that bottom – two thirds back to the peak – I am sorry I cannot see how that is justified.
I fear the gory days are on the horizon rather than the glory days.
The Trader
Trader hi,
I agree totally. Here is an extract from a Money week magazine article on the web this afternoon in reply to those saying the glory days are back.
……..we are desperate to be bullish ….. But given the way bank crises usually pan out we just can’t see this market as anything but an accident waiting to happen. – MoneyWeek
A Virgin