Wednesday, February 8, 2012

Dow - Will it turns?

Dow has been slowly inching its way towards its 2007 October's peak despite of the financial crisis in Europe. Dow closed at 12,878 on Tuesday, 68 points above point B. 0.53% exceeded, still acceptable as the end of wave 2 rebound.

Is Dow going to turn down from this level? Only time will tell.

In today's news, Germany saw the deepest drop in exports for nearly 3 years in December. French economy is expecting zero growth for the 1st quarter of 2012. I don't think European markets have hit bottom.

However, the optimism that the deal on the second bailout (Euro 130 billion) for Greece can be concluded soon pushes the Euro to an eight-week high and European markets rose between 0.5% to 1% at the opening of Tuesday trading.

10-Year Government Bond Yield

At 32.520 %, hard to imagine.

13.536 % Down from its January 2012 peak of 17.39%.
It is only taking a breather. Watch Portugal closely.

5.576 %, what's next?

5.240 %, may stabilize around 5%

Looking at the bond yields, I don't think the worst is over for Europe, but Greece can be quite close to the bottom.

One more drop after the current rebound should see the bottom for Greece. If wave 4 rebound can reach 800 and wave 5 ends at 400, that is another 50% drop. From 2007's peak of 5334 to say 400, that is 92.5%. If one still holding his 2007 stock bought at the peak, his $100.00 is left with $7.50. Don't play play when you are holding stocks at market's peak. When you need to cut, you have to cut and preserve your capital.


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