Technical never wrong but not always…

DOW surprised most of technical indicators, because of double dipping within 3 months span. The last November’s low (~7500 and S & P ~750) was considered as low of this bear market but now again DOW down for second time. Historical perspective now this recession/depression is compared with 1873 great-great depression. But history for just reference point we can’t take it as is. As everybody knows we are going through an unprecedented tough time of our life time.

Investor’s usually ignore main street’s money spending, stimulus plans, mortgage relief’s, they are very curious about how this government going to fix credit market. So far no body from new Mr. Obama’s administration detailed out some robust plan to fix credit markets other than some stress test.  May be they are still brainstorming how to’s and other matters. But investor’s point of view they want to hear a solid plan from new administration. One message from lawmakers is, if stress test failed on a bank, then the bank would be a candidate of nationalization, which creates panic among major bank’s stock holders.

DOW’s 7300-7500 is the low for this bear market. Why we are very confident about it? Still investors has money and money waiting in sidelines to come into wall street, the high run of Gold price is great example of investor’s confidence about investing. But obviously they are looking for a super duper safe investing. The saving rate increase, gold price increase are the signs of early recovery period as per top economists. But now DOW index is down further to 7365 and may go down up to 7200. But the point to remember is Bank of America, Citibank and JPMC are the component of DOW and they are now new eye of this hurricane. So we don’t need to look into DOW index for time being.

So this is good time to investing into stocks. The answer is yes, if we are looking for a long term investment option then it is a golden time but for short term it is not a good market, still there are lot of “grey area” especially credit market. The initial indications from new administration is not so encouraging because they are also still don’t know how to fix it, until everybody clear with how to fix the credit market, we can see unstable market here in U.S and all over world, hence investors keep on invest in gold, bonds and some safe havens.

Source:

http://www.bloomberg.com/apps/news?pid=20601087&sid=agapqPsrRIEY&refer=home

http://www.cnn.com/2009/US/02/20/economy.history/index.html

http://online.wsj.com/article/SB123487180665799141.html