Posted on Tuesday, 24th March 2009 by Cheyne
Two bullish weeks in a row, and one hell of a Monday which pushed the Dow Jones up over 7 percent. Things are looking pretty good at the moment. Everyone loves trying to call the bottom, but it is all really just guesswork. Let’s spend a few minutes looking at just how much nobody has a clue.
CitiGroup stock has tripled in a couple of weeks. Bank of America has almost done the same. Leveraged bull funds are expediently higher than they were and leveraged bears are tanking close to where the inverse was two weeks ago.
When this is the case, it is pretty clear, that for the time being, fundamental analysis is out the window. Technical analysis it is than, right?
Wrong.
The US Government is interfering way too much with the markets to make technical analysis accurate in most cases. We have the fed deciding they want to buy treasury bills, and Timothy Geithner announcing the public-private plans to rid the banks of their toxic assets. This constant news is pushing the markets way out of whack, which is scary.
So what is Mr. Market basing his prices on?
Nothing. Nobody knows what is oversold or undersold, nobody knows anything anymore. And that is what makes times like this scary as hell, and pushes most into swing or short trades, get in, get out, it’s all educated guesswork for the short term.
We have been fooled by the dead cat bounce before, be wary.
Posted in Markets | Comments (0)
