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Tuesday, October 28, 2008 

The stock market engine will seize for few months

Stocks tumbled around the world again on concern government efforts to stabilize financial markets won't avert a recession. The signs of recession are now clearer than never. The German business confidence reported today showed a significant decline to the lowest level in more than five years in October as the deepening financial crisis dimmed the outlook for economic growth. The history shows that the financial problems should lead to several years of slowdown or recession. Two recent articles of the IMF show that there is no worst financial crisis for the real economy, than those with roots in the banking system. The banking crisis of the past thirty years have dictated that economic slowdowns caused, on average, about 20% of GDP in four years since followed. The IMF also concluded that 42 registered banking crises in 37 countries since 1970, cost on average 13.3% of GDP to the budgets of countries, via aid to banks and revenue. It looks like the stock market engine will seize for few months.

More trade Ideas below for Tuesday :

Chart courtesy of stockcharts ( click to enlarge )

GG -A dip below $15 again will accelerate the down move. On the upper side, the outlook will improve above $17.50. On the technical side of the stock, the 50 day and 200 day moving averages still indicates weakness as the stock still trading below both moving averages. The only technical indicator which shows signs of bullishness is Stochastics which suggest a buy signal as K line crossed on top of D line. Avoid fresh exposures until the stock closes above the resistance level at $17.50

Chart courtesy of stockcharts ( click to enlarge )

JNPR - The stock has broken all medium term supports, and appears weak. On the upper side, immediate resistance is at $18.05. The next resistance is at $20, and long position should be taken only above that level.

Chart courtesy of stockcharts ( click to enlarge )

PEP - Technically, the stock is in a downtrend. There are no signs of a recovery in stock price as yet. The average daily trading volume needs to exceed 10 million of shares. If a stock trades too thinly, chart analysis doesn't help much, because there just are not that many traders involved. One big buy or sell order can move the stock in ways that chart analysis just cannot predict. At the present moment, there is a risk of a drop to $50-$51. Stop-loss for long positions may be placed at $50.65. On the other hand, a close past $55 would impart bullish momentum.


Disclaimer : Trading stocks involves risk, this information should not be viewed as trading recommendations.The charts provided here are not meant for investment purposes and only serve as technical examples.

That's All. See you tomorrow !!!

AC

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I now see exactly whats going with this world. If you say yes, the others say no, its a tough world out there in order to get ahead..
But, as long you stay up, keep your head up right, do your homework like the Mister that wrote this well written piece did.
Sooner or later, you'll have a plan and succeed, so its never too late to begin, start now! Don't procrastinate, get to organizing your life and you too will make it in the business world! :)

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  • I'm a 43 year old Independent Trader using proprietary technical analysis with more than 18 years experience of investing in the US stock markets. I started this blog in 2006 simply as a way to share my thoughts about capital, risk management, and trading. My blog contains only my personal opinion and is provided for informational purposes only.

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