A new bout of fear gripped financial markets during the past week, causing the slide in global stocks, commodities and emerging-market assets to deepen. As investors’ angst escalated, positions in risky assets were liquidated in exchange for perceived safe havens such as the US dollar, government bonds and gold bullion.
After the S&P 500 Index breached the grim milestone of the October 2002 lows and fell to levels last seen in 1997 – thereby threatening to wipe out the entire 2002 to 2007 bull market – Wall Street regained some confidence late on Friday on the news of Timothy Geithner’s nomination as the US’s new Treasury Secretary.
Oversold conditions are bound to result in rallies from time to time (and possibly around Thanksgiving), but these should not be trusted at face value. For a more lasting market turnaround to happen, I would like to see evidence of base formations on the charts, a 90% up-day, and relative outperformance by the financial sector.
Read all about this in my weekly “Words from the Wise” review:
http://www.investmentpostcards.com/2008/11/23/words-from-the-investment-wise-for-the-week-that-was-november-17-%E2%80%93-23-2008/That’s the way it looks from Cape Town. How do you see the prospects for the markets?
