DOW Jones and Global Market Recap 1-17-2012

2 years ago, China lead the Gobal Bull Market from the 2008 recession.

2011 and 2012 is/was a different story, China was the laggard, pulled down by Europe Debts, and the only hero bringing the Global Market to Positive Region is the United States of America.

Now at 13X P/E Ratio, this #1 GDP by Value lead the 2months rally since the European fears last Oct 2011. I know lately, almost everyone shifted from being Neutral to Bullish due to lots of reasons.

I now shift my Bearish sentitment to Neutral for some reasons and still waiting in the sideline for better Economic news.

1. Dow Jones chart above indicates 2 possible long term trends forming:
a. The Green uptrend lines show Bullish type scenario
b. The black downtrend lines shows that short team peak is probable, supported by the possible reverse of the market due to Negative Daily RSI.

2. 13x P/E of Dow Jones, 12.5x of S&P, 10x of Germany, France and London are all in a good earnings characteristics of Neutral/Bull Markets.

3. China GDP had a soft landing for Q4 2011, everyone expected the slowdown to be a hard landing, but did a good job growing 8.9% GDP for Q4 2011.

4. Moody's downgrade to European Countries did not affect much as 70% of the investors Buy Sovereign Debt than Equities.

5. Unemployment Rate slowly goes down.

6. Bull Market lasts from 2-5 Years. And I realized that the 2009-2011 rally is really plausible and in a Fair Value at 13x. European Debt problem may just be a buying opportunity for aggressive investors. (may need to wait for years to confirm this).


Bearish Concerns/Reasons:
1. Greek Mar2012 deadline of 15B is really a mess when it can't pay even a small amount.

2. Possible Greek Default

3. More Austerity and help needed by Spain, Portugal, Greece and Hungary. More downgrades of Moody/S&P.


For the past 2 months, the PROS stomped the CONS with Bullish-like rallies. Still, a simple happening from my 3 Bearish Concerns can make Investors go crazy and forget all the good sentiments we have.

Be cautious and go with the flow. Corporate earnings are intact that fuels the market. Trade the range and prepare some cutloss levels, as for me, it is not still recommended to go LONG. Europe may take years to resolve it's problem, and U.S. investors may take some time to digest the "safety-ness" of investing in Equities.