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1. How much of the negative news has been priced in?
It has definitely priced in the worst jobs report in 34 years and the biggest jump in jobless claims in 26 years. So, what can be worst? Maybe the collapse of auto bailout? But I believe the stock market should be safe at least for short term because the following scenario is likely to happen:

President Bush could loan money through early January, leaving it to the new Congress to try again to approve loans for the industry before the Jan. 20 inauguration of President-elect Obama.

2. Is this a bear market rally or the beginning of a bull market?
Reference to their technical definitions, you should be able to do a simple calculation to determine the status of the stock market.

  • A bear market rally is usually defined as an increase of 10% to 20% in prices during a bear market. It is often short-lived.
  • A bull market is usually defined as an increase of more than 20% from a major low for a sustained period (at least 2 month).

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