Market Overview May 30, 2010

Dow Jones Industry Average has been very volatile recently. Although it may come back and test the recent high at 11308.95 as its intra-day high set on April 26, it is on its journey to the previous bottom around 6,500. From longer term point of view, we are yet to finish cycle beginning in 1987 follow the crash in July that year.

While Import Price index – both including and excluding fuel price – has been on the rise, Consumer Price Index excluding fuel and food has been in decline in the past year, reflecting weak demand in marketplace. The current concern should not be inflation. It should be deflation instead. Should the deflation accelerate, it is possible that the economy will enter a round of negative spiral.

Market Overview May 15, 2010

In the week just past, the Dow Jones Industry Average (DJIA) dropped over 1,000 points during the trading session. The decline indicates a significant profit taking, which could no longer be compensated by the new entrants. The lack of significant improvement in unemployment figure and the news about street battles by those who should have been working on the credit issue of their nation triggered the free fall of the price. The profit taking does not seem to be finished and any negative news in the future could lead to further decline of stock prices, sending DJIA back down to 6,500.