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.