So Friday was a down day for the most part. And then towards the end it gavea surprise and closed green. From a daily chart point of view, that shows a green day but it doesn’t show that the entire day the erratic behavior was favoring a red close. In the end it was green, and to some people that might be the only important item of note.
At this point, that chart just looks too confusing to me. I can’t figure out what it would really do. To be honest, the market has fallen a lot and it would only mean that it should slowly go up. Even if the economy were to go in a recesion (and it’s not in a recession at this point), the markets wouldn’t continue to fall at the astronomical rates that were seen in Sep. – Oct. period. It would be much slower decline in prices and that would mean business as usual for traders. Why is that? When the market settles in a trend, just as it was in an uptrend before the recent fall, it will continue in a direction with the normal ups an downs. The traders would normally use those up/down moves for trading. The investors would then start their investing buys at this low prices. The investors that have already bought will simply average down little.
However, a more likely scenario is that the market will teeter around this point for a little bit and then continue slow uptrend. That’s the scenario that I am currently, envisioning.
Let’s look at the DOW for two years. From a technical point of view, one could say that it fell, went back to Fibbo retracement, and should continue to fall. However, that would be the case absent any fundamental analysis. Fundamentally, the market cannot simply go to 0. That would mean the same thing that it would in case of a stock – the stock is worthless. The entire economy going worthless sounds a little dramatic. So then are we seeing a bottom yet? No one can tell for sure, but one of my previous post shows that some investors are starting to see the bottom.
