Economic Charts

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Saturday, September 18, 2010

Market Perspective

About a week or so I posted a chart of the Dow, basically showing sideways movement.  For all that think the market is rallying, think again (small recovery in the channel).  As you can see in the Dow and the S&P charts we are in the upper bound of this channel.  Again, the real channel in the Dow below is actually smaller (as it should have more touch points).  The Dow chart basically should have a real channel like the S&P chart (I will correct this in the future).
It will be interesting to see if we break out of this channel or if we break down from here this upcoming week.  I noted, from several interviews this past week, that the buying has been into weaker volume.  Historically the end of September, beginning of October is a bad time in the market (roughly that time frame).  

From a larger perspective, look at the chart in the S&P that covers over a decade (below).  We can see the run up in the 90's and the fall back down, we also not the run up to 2007 and the leg down (Much steeper) and the current sideways movement from a monthly perspective.  I hear a lot from people, unwilling to face their real losses since 2007, that they have made up all the losses from then.  I wonder how this is when we have not closed the gap to the high.  Turns out their dollar value is up (due to their and their employers contributions) to the level they were at before the 2007 crash.  Well that isn't a gain, that is gains+contributions (more from the contribution side of the house).  Until they face their losses, they will never be willing to make smart moves with their money going forward.

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