I am not a financial adviser so you should not take any part of this blog as being financial advice. Observing and interpreting charts is a hobby and so is this blog. The information in this blog is just my opinion, it may not reflect reality. Stock market investing is risky - you can lose all, or potentially more than all of your money given certain market conditions. Not only can you lose a lot of money buying shares, you can also lose a lot of potential profits by selling shares at the wrong time. So please do not buy or sell shares because of information in this blog. Whether you buy or sell shares is your decision as is the decision when to buy and sell. Do not risk any money you cannot afford to lose. Do not risk any money if you do not fully know and understand what you are doing.

Wednesday, March 30, 2011

Could this be a replay of 2007?

In August 2007, the market got a massive shock with the All Ords crashing almost 1000 points (15%) in just 24 days. But then just as spectacularly, over the next 27 days it had taken out the July high and 26 days after that it had reached the all time high of 6873. After that we saw one of the most bruising crashes in history. The first chart below shows the move down and back up to the November 07 high.

In March 2011, the market also had a big shock tumbling almost 500 points (9.5%) in 21 days. 9 days later it had rallied just as sharply as it did in late 07 and was only 100 points from where it started at the February high. Could this market go on just as it did in 2007 only to find a nasty surprise just around the corner? So far the moves down and up seems quite similar. By the way, the XAO Indicator remains red.

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