28 October 2008, Tuesday saw a much composed and calm market mood as global stocks rallied on from past consecutive sharp losses. The recovery was sparked by Hang Seng Index, Hong Kong Bourse saw a very rare 14.35 percent gain. HSI recovered from the losses which was recorded a day before which sparked the rest of Asia to rally. Straits Times Index, the bourse for Singapore opened significantly down and shorting was going on really strong. But as soon as the afternoon session resumed, the only way is up which caught many shortist by surpise. Buying was strong and covering was stronger which led to market rally till STI closed.
Dow Jones Industrial Average Index, DJI opened sky high as investors now felt more assured as world market are treading towards road of recovery. The released of Consumer Confidence data fell to 38 which is very far away from the expected 51 by analyst. Well, even so, DJI is still way in the green with three-digit gain and was up by 125.60 or 1.54 percent during the time of this post.
Well, I have expected this rally to come because the selling was overdone. But in order for market to make perfect sense to me, it should not be rushing for recovery and instead should be mixed and staying abreast with moving averages before treading upwards. Steep incline is not a very good indication as it means there could be steep decline as well. However, the current market does not make sense anymore as selling was unidirectional and trend and news will be the prevailing factor of market movement. In this juncture, all eyes are on Federal on whether it is going to go for a key interest rate cut. The rally is largely positions for making gain out of this news.
I could not speculate whether the market had bottomed. But I guess, the market has more or less stablize. Markets around the world could pare today’s gain if more unfavorable news were to unfold.
The above are of personal opinion and not at all an inducement to trade.