Short rally on the Dow spells continued turbulence
All things are not what they may seem to be. This is specially true in economics, and even more so when it comes to the Dow and all major stock markets. Once upon a time… the value of a stock was based on fundamental values which were easy to study and understand. Decisions moved on a human timescale. Book-keeping was made mandatory as much for the benefit of the IRS as for the stockholders.
Things have changed. While the books still have to be done, the stock markets have long since migrated to automation, millisecond-ownerships and acting as a antenna that tunes in on the sentiment of global economics and politics. So what is the point?
The point is that stock markets no longer provide a good venue for long-term investments. For the short-term player though, turbulent times are good times. Playing the bouncy wave is risky though and your main focus should be on instant decisions with a finger on the button and an eye on the screen. Obviously, this is the daily reality of a day-trader but get ready for more demanding times where you will need to tighten your game considerably.
There will be no return to the old times and as the money-tree grows it also becomes clear that the root system is under-dimensioned and may not be able to support the growth pace. The most troubling part is that what can´t be seen is being ignored.
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Dow struggles together with falling global markets
Dow Live Report: DJIA takes a nosedive on opening and reflects a pessimistic outlook for global economy in the coming months.
The debate is hot over what the causes for a possible global economic stagnation are. Needless to say, the aggregation of dark clouds has been going on for some time and if you are surprised by the negative numbers on your screen, then you should reconsider investing in stocks.
So, are we entering another recession? No. Because we are already in the middle of it. Not many claim that this is the double dip but unless you believe in economic magic and the sudden solution of a myriad of financial and political problems, the setting is ripe for some tough times.
The banks are back in the spotlight on a global scale, and together with the poor economic condition of many EU states paint a gloomy future. Keep an eye on Japan as a potential catalyst once again.
Looking at the live stats for DJIA it hovers around the -4% mark, which puts it only about 1000 points above the lowest level over the last year.
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Massive spending kicks the Dow back to life
After a week of scary tendencies, DJIA and the global markets open on a upbeat note. But will it last? What is financially different about this week, from the depressing market week we just had? In reality, not much. However, stock trading is much more than a numbers game.
Adjustments, the methodology of trading, automation, psychology and the global state of affairs seem to have stronger effects on a stocks than the fundamental value it represents. Last week also proved just how hard politics can hit the markets.
Someone told me we were having a rally today. I agreed that if you focused on Motorola or Google then rally it is.
The recent mega deals that Microsoft, Apple and Google have recently done in the mobile business is a good pointer at where the money is, even in troubled times. Mobility will continue to grow and is already a vital part of modern infrastructure on the same level as electric power and monetary systems. Google is a very strong player here with a long-term strategy which may dominate the market.
Back to the Dow. So, did we have a rally? Retaking a severe drop no longer spells rally in my book, it’s an adjustment. I reserve the rally label to epic thrusts of bullish enthusiasm and positive hope. But with the generally sombre forecasts about the global economy, and the currently soggy life of the Dow, ending a day with any sort of gain seems to ignite renewed hope in the shortsighted.
If your interest is long-term, then you need to do a massive due diligence on where the world will be in a couple of years with global warming, extreme energy demands by Asian countries and a shortage of food supplies as the supply of basic ingredients in artificial fertilizer begin to decline. Above all, you need to consider in what state the EU might be.
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