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Bottom of the U.S. stock market? |
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Friday, 24 October 2008 |
Yesterday after a record increase in Dow Jones Industrial Average by 11.1 percent optimism is partly returned to the market and many analysts have expressed the opinion that "the bottom has been reached. Is this really so?
According to Ed Klisold of consulting firms Ned Davis Research, quoted by Marketwatch, it is necessary to pass some time before we can speak of a stable market support. In several short-term increases in the market last year by Ned Davis Research resist "temptation" to give a positive evaluation and ultimately present were made. Such is their opinion regarding Friday bottom.
The position of Ned Davis Research is based on the principle of different "types" beds. There are so-called "historical" beds, which are formed for several decades - this is the bottom of the American market in 1982 then started a bull trend is not impaired and present, although several of the financial disturbances since then. The second type beds are cyclical, such as that in the 2002 third type are short-term beds, which are formed when temporary adjustments and do not give rise beginning of a new trend.
According to Ed Klisold now approaching a new cyclical market bottom, which in no event was "historic". To determine the stage of market trend, from Ned Davis Research used 12 indicators, as currently 10 of them signaled a bottom. "It is a fact that, although two of the indicators do not confirmed. In 2002 only 9 of the 12-indicator they showed "bottom", explains Klisold.
But even he really bottomed Friday marks the end of decreasing trend of 2007-2008 year, is likely to be re-test those levels. Namely, if this test proves unsuccessful, the timing of purchases would be appropriate, considers Klisold.
Analysts Marketwatch Arvin Kelnar also of the opinion that at present Journal is still too early to talk about reverse the negative trend. "After the free fall in recent months was inevitable such a steep rise" said the Kelnar.
In his words, credit market, which is the main concern of investors at the moment is still frozen, a U.S. real economy is in recession. Kelnar recalls that Dow Jones is about 40 percent below the peak of last year.
Yesterday Dow Jones Industrial Average added 11.08 percent (936.42 points) to 9 387.61 points, which is at its strongest increase in the last 75 years. This index divzhenie samples downward trend line declined from last week.
After strong increases in exchange indexes in Europe and Asia today, markets in the U.S. also noted drastic increases.
Optimism came for action by European governments to combat credit crisis. Leaders of the countries of the euro zone and Britain announced that available funds amounting to over 1.3 trillion Euro, which significantly exceeds Rescue Plan U.S. government worth 700 billion dollars.
For bulls moods impacted expectations that the U.S. administration will move to the implementation of the rescue plan, as there were forecasts that the government would resort to acquiring shares of some big banks in the country.
As a result of strong optimism U.S. stock index S&P 500 marked its biggest growth of 21 October 1987 so far, increasing by 104.13 points (11.58 percent) to 1 003.35 points.
The main benchamark the U.S. market Dow Jones did increase seen in 1933 from 11.08 percent (936.42 points) to 9 387.61 points, evidence of Bloomberg. Technological Nasdaq index, along with 11.8 percent to 1 844.25 points.
Today's growth represent a significant step forward for U.S. indices, which registered its worst week since 1933, drop by 19 percent.
Today remarkable growth was recorded in the price of the shares of Morgan Stanley. After the message that Japanese bank Mitsubishi UFJ will acquire preferred stock with ten percentage annual dividend instead of pre-planned share of 21 percent in the form of ordinary shares of the bank securities were more expensive with goals 87 percent to 18.1 dollars per number.
Indexes in the U.S. and Europe through fall from power last week. After growth of 11.58% American index broader S & P 500 is up more than 5 percent above the trend line, which passes on 950 points, which went from stage to 7 consecutive reductions that led to the biggest weekly drop from 1914 onwards .
The next more serious resistance levels are 1050 and 1100 points, which are other trend lines.
After growth of 11.4% German DAX samples deep trend line supporting the bear market of the past 5 days and enter a new phase. |
World Business 
