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Posts Tagged ‘bear market’

US Stocks oversold in Bear Market rally

Posted by Adrian on March 26, 2009

So watch for a sell off, could be anytime soon. Stocks rallied after Treasury Secretary Tim Geithner announced the Treasury plan (23rd March 2009) to purchase toxic assets from banks. To put simply a purchase agreement in which the American tax payer will guarantee toxic bank assets, with a small percentage of private investors (also guaranteed by the taxpayer) will contribute in the purchase. This is to clear out the banks depreciating assets, hence (in theory) get the banks to lend to each other. In effect an attempt to free up global interbank lending which in turn then will re-lend to the consumer. Of course the plan won’t work. Suffice to say stocks rallied. Although the rally is essentially an artificial stock rally as economically the US is still very weak (the US shrank by 6.8% last quarter).

Also Treasury yields hit negative, inflation could be on the rise with the US Dollar being sold off. Note also gold is rising. I think most traders gut feelings (trust the gut…it’s always right) something is going to give with the US government, as it becomes a monetary expanding debt binged monster.

The US stocks rallied in almost every industry, good to note that the banking sector rallied although somewhat muted. Note the 8300 line (US banks) in my opinion doesn’t show a sustained recovery, so it has to be put into context that the Tim Geithner plan is related solely to banks, not the broader economy. In may be a long time before banks return sustained profit as most of them are operating as zombies. In conclusion there is no major rebound in the banking sector, even with the rally.

The dow and s&P500 are both now sitting above the 50 day average and touching the upper Bollinger band, the RSI (although better suited for stocks) shows overbought signals.

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Global markets rally on a Citigroup internal memo!

Posted by Adrian on March 11, 2009

Crazy trading in my opinion, still markets jumped mostly from bank related stocks. But a brutal bear market will remain, then will get the graveyard market. Bargains are there, still looking oil exploration and oil storage companies (long term as far as stocks go). But a bottom is months away, these are bear market rallies. Citi bank is a zombie, the price ($1.45) and bank are a joke – I’d still short that junk company.

China is going drag equity markets down with their terrible export/trade figures (news out today).

Check the Aussie (5min graph), what a sell off (although staging a slight recovery):aud

*morbius glass does not give investment advice. Trade at your own risk

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