Markets Are Saying Actions By Central Banks And Governments Are Not Working

The major stock exchanges have lived through another week of widespread panic, with United States and Japan leading the falls. The Dow Jones Industrial Average (^DJI) fell below 8,000 for the first time since 2003 over this week as higher borrowing costs and slower consumer spending spurred concern carmakers, insurers and energy companies will be the next victims of the credit crisis. The fear that the credit crisis will worse and the economy will go into a deep recession is weighing extremely on the investor sentiment. The market continues to show skepticism that the intervention of European governments and the recent cut across the reference rate of interest of major monetary authorities will be not enough to prevent the financial crisis affecting the world economy and avoid the recession.

The most affected sectors by this crisis are definitively the financial and the tech. No one wants to take positions in sectors vulnerable to the economical fluctuations, mainly when the credit crisis is worsening. Also, the continuing fall in oil prices, which is the lowest in a year, and other raw materials penalizes the negotiation of the producers of “commodities”.

What markets are telling us is that it doesn’t matter what central banks and governments are doing, nothing seems to be working. I have never seen anything like this before. Is this the begin of a new era in stock market?
Let me know your opinions.

Chart courtesy of stockcharts ( click to enlarge )

Goldman Sachs (GS) - It is likely that next Monday will be very indicative of what to expect from the stock for the week. A break below $85.88 intra-day could generate aggressive selling. If the stock opens higher on Monday, rallies up to the 100 level are likely. Nonetheless, such a rally would not necessarily get rid of the bearishness of the break on Friday. Technically, the chart shows this is still a weak stock as 50 day moving average is still below 200 day moving average. MACD which just dropped below 0 again recently indicating a bear signal as well.

Chart courtesy of stockcharts ( click to enlarge )

Apple (AAPL) - On a daily closing basis, there is decent support between $85 and $87.5. Resistance, on a daily closing basis, will now be decent at 101.50. Any close above this level will be considered short-term positive, as there is no resistance above $101.5 until $115.88 is seen. If the near-by support at $91.26 holds up on Monday, a rally up to the $101.5 level is probable.

Disclaimer : Trading stocks involves risk, this information should not be viewed as trading recommendations.The charts provided here are not meant for investment purposes and only serve as technical examples.

Posted in Categories: Contributor, Eurozone, External Research, Financial, Japan, Stocks, USA.

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