Dow Jones Industrial Average and S & P500 are near new collapse

Dow Jones Industrial Average and S & P500 remain green

In brief: First half of trading session on the U.S. stock market goes with interchangeable bands. Dow Jones Industrial Average and S & P500 continues to grow.

Dow Jones Industrial Average was 10,465.21 points. Dow Jones Industrial tried to grow from the very beginning of trading, but after an hour began to fall in the level of 10,415.11 points. S & P500 reached the upper limits of the first line of resistance. Yesterday the U.S. stock market, something happened that we predicted a week ago. Moving in the uplink, index of wide market S & P500 touched the upper boundary of the zone of resistance at 1,130 points.

The rise of the market place against the background of the decision of the Chinese authorities about the weakening of control over the exchange rate of the yuan, which must inevitably lead to a strengthening Chinese currency against major world currencies. Monetary authorities in the developed countries have long pushed Celestial such a step to smooth out imbalances in world trade or, more simply, the higher prices for Chinese goods and thus reduce the cost of imported Chinese products primarily from the U.S. and EU countries. No coincidence that the leaders of yesterday’s market were the producers of metals and mining companies, whose products are most attractive in the rapidly developing China. It quotes the aluminum giant Alcoa (AA) jumped more than 5%, and global miners polymetallic ores and producing a broad spectrum of non-ferrous metals Rio Tinto (RTP) and BHP Billiton (BHP) heavier by 2% or more. However, reaching the ceiling Resistance S & P500, as it often does not take from the first barrier and rolled to the lower level range in the area of 1 110 points. Market participants prefer to take profits after two weeks of market growth, before the meeting, the Fed, the main event of the week. Meeting members of the Federal Open Market Committee (FOMC), the Federal Reserve authority determines the actual level discount rate starting in Washington today and will end tomorrow at 2 o’clock in the afternoon of the day issuing a joint statement after the meeting. The fact that the FOMC will keep the discount rate at the previous, record-low level of 0,25%, observers and market participants do not doubt. The threat of inflation in the United States are now virtually non-existent, according to the latest information for the past 12 months, Th consumer prices rose by only 2% and core component (excluding fluctuations in the value of seasonal food and energy) hauled in a modest 0.9%. In this employment market remains weak, the expansion of job looks miserable, the unemployment rate fluctuates near 10% of the working population, and domestic demand is very cautious and uneven from month to month. In this context, the FOMC is unlikely to risk changing the cost of credit resources, at least until the end of the year. The intrigue of an opening session, only one will leave whether members of the financial conclave in the text of the final statement sacramental phrase that extremely low shutters on loans will continue for an extended period of time.

Connoisseurs of the traditions and hints deshifrovalschiki Washington monetary court believed that the said phrase of nomadic Steytment Steytment in the past year and a half away from the text exactly six months before the first interest rate increase. This will enable investors to judge the beginning of the period, recovery rates and, consequently, will signal a change in behavior in the market. Personally, I think that at the next meeting of the Federal Reserve will limit the finding moderately positive shifts in the economy, pointing to the growing point, but nothing radically change the words and phrases Steytment will not. It’s still early. In addition, a sharp change in tone in the statement of Washington wise men could provoke another collapse of markets, right in the run-up to the summit of G-8 and G-20 in Canada, scheduled for last weekend of June. Who needs it? Nobody needs.

If my assumptions regarding the preservation of the status quo is confirmed, market participants are encouraged by signs of economic recovery and Money for the cost of bank credit will continue to stock-market rally and then there is the next target of the bovine race is viewed psychological strip in 1150 points to the index S & P500. In addition, the court end of the quarter and half year, that as usual, accompanied by the traditional “window dressing”, in Russian beatiuffuly windows. The essence of this celebration in inflating quotations issuers to demonstrate the maximum profit in the reporting period for the customer management companies, hedge and mutual funds, pension funds and other structures related to the game on the market. Most likely, the current in June will be no exception to the rule.

Ukrainian Globalist
2010-06-22 16:02, Economics.

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