Optimism on the coordinated actions of the European Union countries and U.S. to inject capital into banks (Dow up 1800 points from it's 5 year low on Friday) has led to the cold hard reality of a strong, potentially deep global recession (Dow down 1200 points from it's recent high this Tuesday morning) causing second thougths on the value of holding on to stocks. Reality is also sinking in that the various banking interventions, albeit very significant in scope and magnitude, will take time to kick in and have favorable impacts. In the interim, uncertainty rules.
Expect the see-saw to continue, and potentially for a re-test (and dive below) last week's lows. Earnings will continue to stream out over the next few weeks. Attention will be focused not so much on the rear view mirror (3rd quarter earnings) but the windshield and the outlook ahead. Buckle up...
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