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Financial Markets Analysis: Stocks Bounce, Where Next?

Stock-Markets / Stocks Bear Market Feb 08, 2009 - 02:26 AM GMT

By: Nadeem_Walayat

Stock-Markets

Best Financial Markets Analysis ArticleStock Markets continued their strong rally on Friday from early week lows that had threatened to break below the recent tight trading range and target fresh bear market lows.

Where Next ?


Using the Dow Jones Index as a proxy for other global indices that exhibit similar trend and patterns. Friday's powerful rally cannot be ignored as it does imply that the recent peak of 8,400 is expected to be breached early next week, however heavy resistance lies overhead all the way to 9,000. This implies that the rally will soon run out of steam probably around 8,600 and therefore target a return to the tight trading range of between 7,900 and 8,400.

The longer the market continues to trade within the trading range of of 9,100 and 7,800 the more powerful will be the eventual breakout from the range, at this time probability still strongly favors a break lower with a summer bear market target of 6,600 as of 20th Jan 09. The far less probable outcome of an upside breakout would target Dow 10,300.

Again, I need to iterate that we are in a stocks bear market and the current action is a correction within the bear market. So whilst the moves higher are tradable, they do not at this point come close to signaling an end of the stocks bear market that is expected to resume towards fresh lows this summer.

Outrageous Bank Bonuses

Meanwhile greedy culpable bankers continue to reward themselves for failure with billions of tax payers monies across the globe. In the UK the Labour governments in-action is going to cost it the next election for allowing this to happen, after-all the banking rules and contracts have already been been broken in the aid of £800 billion of liabilities with more to come, the only contracts still being held up are those that allow bankers to be rewarded for destroying the British financial system. This is totally outrageous and unforgivable.

The banks try to defend the indefensible with statements that they need to pay bonuses to attract the brightest and smartest. So smart are these people that they have destroyed the financial institutions that they worked for, any smarter and we may be looking at an Iceland style Bankrupt Britain, which therefore supports the view of dumbing down on the employees as well as the function of the banks, i.e. to focus on lending out deposited money without resorting to financial trickery to mis-price assets so as to reward bonuses for non existent profits.

The Deflation Survival Guide

This weeks special is the full 60 page ebook on the implications of Economic Deflation by the 30 year financial markets veteran Robert Pretcher. If you have not already done so, download the full ebook whilst it is still available.

Topics include:

Your stock index futures trading analyst.

By Nadeem Walayat
http://www.marketoracle.co.uk

Copyright © 2005-09 Marketoracle.co.uk (Market Oracle Ltd). All rights reserved.

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Nadeem Walayat has over 20 years experience of trading derivatives, portfolio management and analysing the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem's forward looking analysis specialises on the housing market and interest rates. Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication. We present in-depth analysis from over 250 experienced analysts on a range of views of the probable direction of the financial markets. Thus enabling our readers to arrive at an informed opinion on future market direction. http://www.marketoracle.co.uk

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors before engaging in any trading activities.

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