After a day like Wednesday (8/11/10), which left many investors feeling a little rattled as the market exhaled, it is important to take a step back and look at the facts.
The financial headlines: "Global Fears Strike Stocks", "Market Woes", Stocks Tumble", etc. make an investor doubt their positions and convictions, for fear the sky is falling. But it's important to keep all rallies and declines in perspective.
Over the course of the past month the Dow Jones Industrial Average (DJIA) has gained roughly 1000 points, but with the Dow losing 265 points on Wednesday that rally came to an abrupt stop. To gain perspective on this decline I evaluated the longer term (100 point box) chart of the Dow. After attaining a high of 10,700 earlier this month, the Dow has pulled back to 10,400. Thus far, the pullback is a normal, and healthy, pullback within the confines of an overall positive trend for the DJIA.
There is no way to tell what the future holds however, by evaluating the underlying supply and demand relationship of tthe market we can gain some insight that might not otherwise exist, and is sorely lacking in the media reports.
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