Stock market is acting like bubble and moving in all direction. I wasn't surprise seeing stock market rallying at the open after UK GDP showed, its in recession. US GDP will be announced on Friday, and its expected to show 1.2% growth. Today's rally in Gold suggest that stock market is waiting for some kind of easing from anywhere. This is one of the worst market to place any trade. My suggestion would be sit on the sideline and wait for the opportunity.
If you think this market is safe for investment, then simply answer this question, and if your answer is yes, then invest in this market.
1. Do you think this market has hit bottom ?
2. Did you think Qe1 and Qe2 improved this economy ?
3. Will Qe3 move this market by 1000 point ?
4. Does printing money create job or growth ?
5. Do you think LTRO 3 will be launch soon, when LTRO1 (Dec) and LTRO2 (Feb end) with 1 trillion was completely evaporated ?
The answer to all the above question in "No".
Lets assume, QE3 will be launched and market rallies 2000 point which brings Dow to 14676 which is all time high. With US GDP at 1.2% and Dow even at 13000 doesn't make sense. I think there is more downside in coming days. Ideally Dow should be below 11000.
Lets see where chart of Dow and S&P500 are heading.
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| Dow 3 month chart acted as support for Dow today. |
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| Dow inside channel 12,827 and 12,531. After consolidation, it has to break upside or downside. |
