Monday, 8 February 2010

Weekly Wrap: Your source for stock, stock market, and stocks info

Weekly Wrap: The market experienced a major sell-off on Thursday. It was quite interesting to see a day like that because the market hasn’t had a day like that since 2008. The market plunged all the way into the Thursday’s close and finished at the absolute lows. I think that’s a rather negative and bearish sign. Meanwhile, though, the pundits still think that it’s a little pullback. If the markets keep moving lower, I wonder what they will say then. Toyota stock price has fallen to pieces in the last 3 weeks. I didn’t realize how emotional the reaction to the recall news would be. As Wikipedia states, ”The Chinese word for "crisis" is frequently invoked in motivational speaking along with the fallacious statement that the two characters it is composed of represent "danger" and (supposedly) "opportunity." Who knows whether the motivational speakers are just making it up, but it sounds good. The fact of the matter is that there is opportunity in the current Toyota crisis. I don’t think this is the end of Toyota by any means, and right now the heat is on them. But in a year or two people will forget about the whole thing when they fix the problems with their cars. In the meantime, I would look at potentially buying Toyota because it seems as though some large funds are dumping it. Let’s not forget the automotive industry itself is in bad shape. But I feel that Toyota is still one of the best car makers in the world and every company makes mistakes and goes through difficult periods. Perhaps this is Toyota’s time right now. From a technical standpoint, the heavy volume (indicating activity from larger players) is interesting to me. If you start to see big down days on heavy volume, but price closes at the top that would be a very obvious sign that “big money” is supporting the stock, not dumping it. The only thing to do would be to wait patiently for those signs. The unemployment picture in the US is starting to get almost comical for the standpoint that the numbers don’t quite make any sense sometimes. There were 20,000 jobs lost in January but unemployment went down. So, essentially more people lost jobs, but the official unemployment figure shows that people actually got jobs. Let’s just say it’s still bad, whether is 9.7% or 10.5%, it’s still too high and not encouraging. The market staged a big reversal on Friday. Take a look at the candle of Friday and you will see a strong reversal bar. Some sources say that the market bounced because from the July lows to the January peak, the decline was a Fibonacci retracement level. For the market to continue rising, we would need to see confirmation that the rally will continue with a higher volume up day. I really have no idea how this upcoming week might go, but I expect February to be down based on the big down days we have had in the last 3 weeks.

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