Saturday, February 14, 2009

"GM considering Chapter 11 filing"

This headline may be just the excuse the stock markets have been waiting for. Even the suggestion of this has the potential to create a run for the exit in any related stock.

The chart for GM shows that, at least for this stock, the bear market actually started at the burst of the bubble in 2000. Some other stocks also started their decline back in 2000.

This news also comes at a time when the markets are technically poised so that they have "the potential" to fall quite quickly, at least in the short term. If that were to happen then this could create sufficient downward momentum for all indexes to break below their Nov. lows. Some people view this low as a technical level of support. A drop below the Nov. lows would be viewed as the next important step in the bear market. Some who bought since Nov. thinking a big rally was at hand or the end of the bear had been seen may sell to cut their losses.

This is just speculation on my part but it is fun to guess which way "the crowd" will run.

1 comment:

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