There are some very interesting things going on
in the market right now. The INDU has almost reached the latest target
price and there should be some temporary stability or a rally off of this
level. This drop has shown that the older rules of overbought and
over sold really don't apply when there is fear in the market. How long
will the redemptions continue? How many hedge funds and mutual funds
will be left after this debacle is over, and it will be over.
It is terrible for one who believes that buy
and hold is the answer. It might be if you can live long enough.
How many of the stocks that got clobbered in the dot com bust are anywhere
near their old highs. Even the NASDAQ 100 couldn't recoup 50% of its
drop. After the saving and loan crises of the past it took over two
years for things to stabilize and start to move forward. This is a much
bigger mess and it is moving toward socialism in the financial sector with the
government about to take large positions in the banking system and insurance
businesses. They now have a piece of the auto industry with a $25
billion investment,loan, there. Now we enter a new arena with the
government entering the commercial paper market. Will credit cards
and car loans come next?
The interesting thing is that in some circles we
are still in the bull market move that started in 2002 and until 7000 is
taken out that move is still in play. Of course giving back all you made
is not a pretty picture. As you can
see from the chart the 8500 level could give us some support.
Just one man's opinion