The same chart was posted one month ago. Dow has since gained 12% from the last low. Despite the continuous debt woes in European region. European Union being made up of many nations is facing difficulty in arriving the collective decision on the best remedies for the debt laden European nations. The rich nation ie France and Germany are demanding the PIGS (Portugal, Ireland, Greece and Spain) to push through some auterity measures before agreeing with the rescue package. The austeriry measures include scaling back public spending and cutting pension. These measures were deeply unpopular has give rise to numerous occations that the Greek taken strike to the street.
Despite the unstable condition in the investing world, Dow managed to chalk up 12%. I think it is pretty impressive. The current state is showing an overbought indicated by RSI. A conclusive decesion is expected to emerge from EU to resolve the debt crisis in PIGS. If it is a bad news, market will be punctuated from here ie stock will go lower. If it is a good news, market will probably shoot a little bit more but not much! As the market has in the past one month priced in the optimism. Immediately after the short surge, a market respite will kick in. Hence the best action to do after the news due on Wednesday, 26 Sep 2011 will be no action except taking profit for those who bought early when bad news is announced. See the summary below.
Those already bought | Those have not bought | |
Good news | Hold on, as you may get higher price later | Wait for the market to retreat – currently overbought |
Bad news | Take profit | Hold on, as you may get lower price later |
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