Monday, April 20, 2009

Party Is Over

Six week long rally is over. It was huge. Dow Jones is up almost 1500 points.

But party is over. Dow Jones fell under 13 day moving average, same thing happened to S&P 500 and Nasdaq composite. I had some hope that Naz can stay above 13 day MA, but no such luck. This is a major technical signal, discussed several times in my entries:

The Signs of The Bottom: Technicals
Dow Is Over 13 Days MA!
This Rally Might Still Have a Chance
Dow Rally: New Milestone
This Wonderful Rally

Now what? According to 1932 scenario, we might have 2-3 months long slump, followed by another bull market. Or market can go down big time, cross down 50 day MA and test March lows. I think that Dow is going to stay in 7000-8000 range for a while, but Mr. Market might have couple of surprises for us.

Important decision time. I'm going to act on a premise that Fed is in control of the situation and current crisis is just a Great Recession, which is not going to become a Great Depression 2.0. Which means that either March low holds or new low will not be much lower. With stocks going down, I'm going to load on three groups: tech, financials and bonds. Particular stocks are to be defined. To reduce risk, I'm going to keep transaction sizes small and take profits if I feel they are good enough. No particular stock picks right now, need to see the action.

Seeking Alpha Certified


Anthony B said...

ain't over til the fat lady sings!

Alex Filonov said...

Fat lady sings? How about this one: