Today is January 14,2010. This morning, Dow has rise above 10700. The first thing that came through my mind is “Wow”. However, will it be able to climb anymore up? My answer to this is definitely a “NO”. The market has risen far too much. It has rebounded over 60% from last year’s bottom in March. There are two main reasons why this has happened. First, investors are too optimistic about the global recovery. It seems like they have one eye, “the rational eye” covered throughout this rally. Second, investors push the market a lot lower that it should be in last year’s March. As a result, company’s can easily beat the market’s expectation and where this rally has started. There have been lots of people who lost lots of money but there are lots of people who made tons of money from last year’s financial crisis. Those investors basically set a trap for investors who lack of economic knowledge. Furthermore, as of today, those investors in Wall Street has done it again using the same strategy but in an opposite way. This time, they have pushed the market way too high so that they can sell their assets and wait for it to go down again. Thus, my assumption is that the train has left the gas station. There is no way that it could go up anymore in the near future. Maybe maximum to 11000, I guess. But there is no way it could go above 11100. A lot of people including myself are just tired of this rally. Dow Jones will definitely go down. My prediction is Dow will go back to 9000-9200 within the next two and a half month. Those results in 2010 will look a lot worse than it seems now. Therefore, don’t get fooled by the optimistic news.
Here are a several stocks that I think you guys can buy to hedge the risk if you are planning to keep some stocks on hand.
1. FAZ. Buy below $17
2. SLV. Buy anytime
3. UCO Buy below $12
Hope this helps
MC
it's always wise to be cautiously optimistic.
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