George Bush's quip that Wall street got drunk and now has a hangover understates the depth of the problem. It would be more apt to say that Wall Street has been on a 30-year credit binge and needs a long stint in rehab to wean it off its addiction.
The latest housing bill passed by Congress is no miracle cure and will not prevent further write-downs in the financial sector. There is some evidence, however, of renewed confidence in the mortgage sector — which should ease downward pressure on house prices. The latest rally of financial stocks is typical of a bear market dead cat bounce. The S&P Financial index displays a bearish shooting star candlestick pattern, warning of resistance, while Twiggs Money Flow oscillating below zero signals continuing selling pressure.
The Dow encountered resistance at 11750, the former primary support level, forming a doji star candlestick pattern. Reversal below 11500 would signal another test of 11000, while failure of support would warn of a decline to 10700.
technical analysis
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Last
26,683 |
Change
82.730(0.31%) |
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| DJIA (INDEXDJX) Chart |
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