Wednesday, May 13, 2009
How long will this market rally last?
MoneyWeek: How long will this market rally last?
"The rally we have seen over the last two months has been exceptional. I know these are exceptional economic circumstances – but they are exceptional because they are so bad. Yet a number of people are saying that a new bull market has begun."
Posted by damien @ 11:48 AM (841 views) Add Comment
7 Comments
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1. mountain goat said...
They should not be surprised by this rally or call it exceptional. Things are bad but how bad? No one knows, everyone is guessing or making predictions. That is what markets are for. They discover the value of something by swinging up and down around the "fair value". Technically markets were "oversold" so based on how much bad news there is right now this bounce is probably helping to establish what is "fair value".
Is there more bad news to come, IMO yes, so further falls to come. But I fully expect big falls to be followed by big rallies.
2. techieman said...
hey MG - even with todays news and moves in the FTSE we may be seeing just a retracement to a bit higher... not that my position agrees with that - a breakout above the recent 4520+ highs would see us marching on a bit more first imo.
Anywa, thats not really why i wanted to post to you. I see that the EW currency thing has a one week free trial starting today. Might be interesting? Im interested to see if they agree with me re £/EUR.
3. techieman said...
" Its remarkable upside violence is typical of a bear market rally." so if its typical why is it remarkable?
Of course a counter-trend move that moves quickly and for a high % IS typical. Its because (in a dominant bear market the [mostly] shorts cover and then the bulls squeeze em) the reverse in a bull market is also true. Its a shake out.
Could this be the start of the reinstatement of the bear? Well we need to breach a fair bit of support before we can be confident. The jury is out....
4. mountain goat said...
Thanks for tip Techie I will certainly try free EW trial again.
PS today got stopped out of the silver position I told you about the other day. Broke even, price just going no where so I put in a tight stop. I thought wider market was going up a bit more but seems to be making a decision at the moment instead. As you pros keep saying let the market decide before putting your money to work!
5. techieman said...
MG - Re the silver position resistance around here (funnily enough this is mentioned in the article).
"Normally" the market will hit resistance and then come off at least once. i.e. it wont breach on the first time (or if it does it will breach a little to run some shorts). If it doesnt do that - but marches on through the prior high say - then you have a high probability that the market will go a fair bit higher. If it then comes back down but doesnt go below the prior high - i.e. the prior high now becomes support - then again you have a good chance...
6. techieman said...
MG - this might help if you are interested .. http://stockcharts.com/school/doku.php?id=chart_school:chart_analysis:support_and_resistance.
You can have support / resistance too on different time levels - e.g. you might see some bouncing around certain levels during the day, which you might not see on the daily bars. Thats where the Pivots might work - these are essentailly calculations of daily support and resistance zones.
7. mountain goat said...
Cheers for that TM will give it a study tonight.