It is difficult to know whether the latest falls are another move to a new bear phase or just a clear out of weakly held speculative longs built up over the last few months. It has been reasonably simple for traders to deal the price ranges for the recent weeks and months and this latest move might just be a lesson to these speculators that making money is not (and never will be) this easy.
With banking stocks in the States now at such reduced levels that there is little point in selling them lower unless bankruptcy or nationalisation is in view the game will now turn to other sectors.
Many companies have very heavy overheads which are difficult to downsize at a moments notice (manufacturers and retail spring to mind) and the end game now seems to be one of surviving whilst your competitors go to the wall rather than aggressive marketing. The upshot of retail failures or permanent car production cutbacks is that the remaining units have just enough of a pick up to help out.
Read more >> Spread Trading – an update of views on today’s markets
The above comments do not constitute investment advice Clean Financial accepts no responsibility for any use that may be made of them.