Tuesday, June 22, 2010

Is Dow Jones Stable now?

Dow Jones Industrial Average index show the up trend again after nearly one months' correction. The question is whether the market will continue to go up from this point, especially yesterday show one Shooting Star. I would expect index to challenge 30 days MA, if it can hold firm, then the chances are high for it to continue moving forward.

This week got another breaking news, Fannie Mae(FNM) and Freddie Mac (FRE) going to delist from NYSE. Again, proof the theory is correct, never invest in problematic company. If you hold the stock before the announcement made, sell immediately even if you have to encounter huge loses. This is to protect bigger loses that will follow if you continue to hold on to this stock.

From our experience, the delisting process will move the stock to trade on the over the counter bulletin board *OTC BB. The spread between the bid and ask prices having a big gap, hence there are substantial costs involved, only few people or market makers willing to trade and causing share volatility increase.

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