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Thursday, November 20, 2008 

Fears of recession hit stock markets worldwide

Stocks slumped worldwide, one day after the FED said the country's gross domestic product could be flat or grow only marginally this year, and might shrink in 2009. According to FED report the positive economic growth is only likely to return in 2010 and predicted further interest rate cuts might be necessary. This news triggered a series of falls in all markets, with European and Asian markets being the most aftected by this tough sentiment. Since the start of the year more than $32 trillion has been erased from the value of global equities as the financial-market turmoil pushes countries from Europe to the U.S. and Japan into recession. People everyday are looking for any kind of positive news to justify the idea of a bottom but there are no positives out there. Whether it's commodities or equities, everything seems to be on a downturn far from a bottom. I never saw something like this, no one cares about the fundamental of the companies, the way is just one "SELL everything".

Chart courtesy of www.stockcharts.com ( click to enlarge )

SCHW - The stock has been in a steep decline since September, falling more than 45% from its highs near $28.65 per share. The chart pattern does not inspire confidence and the stock could continue its downward trajectory. In addition, the daily price chart also shows a dead cross where the 50-day moving average crossed below the 200-day moving average, signaling the beginning of a bear market trend. With this in mind, any rally attempt must be considered a bear market corrective rally and not the start of a new bull market trend. Thus, the major direction of this stock is still in the downward direction. Short-term resistances are at $16 and then $16.99.

Chart courtesy of www.stockcharts.com ( click to enlarge )

PCLN was one of the most resilient stocks in the US markets up to June. But the vertical plunge since then has decimated the stock and it is currently trading near its 52 week low at $45.15 recorded this month. The technical chart above shows the stock has been testing the strong horizontal resistance of $58 (on 3 separate occasions) this month. Today, the stock failed again to surprass this key level and the volume traded was quite large, which may be a indication that is too early to break this resistance. The stock is now vulnerable to a drop to the $47-50 range. Remain invested with a stop loss at $50. Only a move past $59.27 would impart a positive trend.

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 !!


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About Me

  • I'm a 48 year old Independent Trader using proprietary technical analysis with more than 20 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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