Wednesday, March 11, 2009

For GT Blog March 11, 2009

Lately the we hear the term “Too Big To Fail” in reference to the large U.S. money centres who failed to manage their risk when they engaged in financial engineering.

Sometimes the price of a stock or an index can rise or fall too fast for the move to be sustainable. This can occur when the price deviates too far from the mean – in this case the Dow Industrials and the Dow Transports our mean is the 40-week moving average

Currently the Dow Transports are sitting at a stunning 45 per cent under the 40 week MA – a modern record. In comparison the 911 terrorist attack collapse printed a negative 28 per cent below the 40-week

The Dow Industrials have the same over-sold condition currently 31 per cent under the 40-week - also a modern record

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