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What the blogs are saying:
Calculated Risk quotes Nouriel Roubini as describing the latest rally as a dead cat bounce or bear market sucker’s rally. Mr Roubini has come out as the perfect economist correctly forecasting the sub prime crisis, then the market crash, and now a possible depression. Mr Roubini says: “And now many emerging market economies – as argued here for a while- are on the verge of a fully fledged financial crisis starting with Emerging Europe.”
My Notes: Surely, even Mr Roubini can go wrong in his analysis. For traders, when momentum is up, go with the flow. If Mr Roubini is corrrect (he should be, since he has done rather well recently) then there will be plenty of signs that this dead cat bounce is coming to an end.
Paul Krugman says that European countries are in a bigger mess than the USA. “In the face of a depressed and possibly deflationary European economy … this is going to be ugly.”
Richard Wilson tracks hedge funds, says it would be hard to raise assets for almost any type of investment right now – but many professionals believe that hedge fund capital raising will now always be harder than it was before. “Hedge funds expect 2009 will be a difficult year for the industry with many looking for a dramatic increase in competition for scarce new investors according to a report by the accounting firm Rothstein Kass.”
And, the other side (Half full glass) :
The WSJ blogs quote this: “It’s very encouraging that the news has gotten so much worse between November, December, January and February, and here we are at roughly the same level on the S&P at the November low,” says Alan Skrainka, chief market strategist at Edward Jones. “I think that says clearly that a lot of bad news in the economy has already been built into stock prices.”
My Notes: The Nifty is in a short term up trend. Expect sideways moves or rallies. A trend change is required to go short. Or, a bounce against 2800 resistance. Meanwhile, buy on dips. Remember, the markets can surprise you!