Last year was one of the worst years for the financial sector around the globe. Where the financial majors started collapsing, without any ray of hope all of them knocked the doors of their respective Governments for help. Some were able to help by introducing the stimulus whereas others showed their sympathies.
Then all of a sudden the markets started moving in upward directions. Even days before they were trading somewhere near their highs.
I was happy; the stocks which I had with myself before recession were performing again and were nearing their previous levels. But to my shock I received a mail from my friend who writes on market technicals. It states that the patterns which Dow Jones is making today are in same lines which it made in the year of 1929 (Great Depression which started in 1929 and lasted till the end of 1930s or beginning of 1940s).
The graphs which I received in mail
To be honest for the first time I thought this thing may not happen again, there might be some lessons in 1929 recession which we still remember and would not let them to repeat again.
Today in the morning when I started reading the financial daily saw that
- US lost 20,000 jobs more in the month of January 2010.
- Auto makers want the stimulus to continue.
- IMF warns India for its double digit deficit.
- Problem in Saudi Arabia still exists (Istithmar spice jet stake sale).
- Problem with Euro Zone countries (news that some countries may default on their debt).
After this I had a conversation with Karan again, he said the chart patterns are same, but cannot say that history will repeat again or not, secondly there is no need to panic the mail which I sent was just to make an informed decision and nothing else. Also in present situation the charts are looking weak if there is any pull back it can up to 4940 levels above this would considered as initial strength where trader is expected to go long and avoiding shorts.
Will keep a track on the global financial markets and will keep you posted on any developments.