Sunday, June 14, 2009

The situation remains uncertain

As matter stand, most investors want to see signs of recovery. Althought there is more money going in to the market than coming out, there aren't signs of stabilization and unemployment would may rose again. While some companies last week were forecasting a earning decrease in 2009, the German group Arcador, where there are 43,000 employees, decided to go bankrupt. G-8 finance ministers said yesterday after a meeting in Lecce, Italy, there are “signs of stabilization,” though “the situation remains uncertain.”
Meanwhile North Korea said any U.S. effort to enforce international sanctions over the communist nation’s nuclear program would be considered an act of war and be met with military force. The sanctions also call for new restrictions on loans and money transfers to North Korea. We have to think what theese global news mean for the market.
This morning while I was running I saw an old Italian war ship and I took a photo. You can see the old ship in the picture above posted. On the other side of the sea harbour there was an Italian aircraft carrier. Its photo is down here.

Sunday, June 07, 2009

“We’re not out of the woods”

It isn't a matter of pessimism or optimism. The 5th of May 2009 I posted something about the rise of the Nasdaq index which generally indicates the major trend in the global stock market. Actually, during the last two months the world's stock market grew more than forecast. For example, the Standard & Poor's 500 index rose by 40 per cent since the March 9th lows and a Goldman Sachs report shows that it, which reached last week the level of 940, won't increase within next six months. Although, China and other emerging nations didn't increase their demand of raw materials, we saw the growth of price commodities as crude oil $ 69 and copper $ 230. We need to understand the behaviour of investors considering the decrease of world's consumer goods and the growth of unemployment rate. U.S. payrolls fell by 345,000 in May, less than forecast, while the unemployment rate hit a 25-year high of 9.4 percent. Meanwhile, here in Europe, Irish unemployment reached 11,8 percent.
In this perspective, actual rise of prices is probably related to an irrational behaviour of investors, who think that stock market has reached the bottom. Next month we will likely see the beginning of the summer drop (traders sometimes say "sell in may and go away"). As soon as the slight decrease of stock markets is remarkable investors will see good shares to buy of course. In my opinion the overall trend since March 9th lows should be up to sideways. We will see a horizontal trend with a result of the prices traveling between strong levels of support and resistance. Most experts said that the latest rally may be a “trader’s rally” instead of a bull market. They added “We still have more problems to be worked out.”
The photo above posted shows the delivery of new cars in Civitavechia's harbour.