20081001

The WIG Index has continued the rally from yesterday (more on it below):

The WIG20 Index looks also bullish in short-term (but without potential double bottom we can observer on wide market):



Both indexes look promising on short term. The WIG20 Index has made higher-low, which is promising. However, we still need a higher-high to signal short-term reverse. Take a look at intraday chart for WIG Index (chart from today's update of yesterday's post):



We can note potential double bottom formation with target price ca.41900. Nevertheless, I would not consider it as formation before we cross at least 39000. Do not forget, we are still in bear market at the best of our knowledge. This is great environment for daytrader, but not for position trader.

After failure of first Paulson's plan, the alternative one is prepared. Author of this article presents some of the ideas. Author raises concerns about removing the mark-to-market accounting rule, but also notes positive impact on mortgage bonds the act could have.

The Baltic Dry Index (BDI) is a daily average of prices to paid by an end user to have a shipping company transport raw materials across seas on the Baltic Exchange. This index is a one of the leading economy indicators as it measures the demand to transport raw materials, before production can be initiated. It tends to be much more resistant to speculation. More of its methodology and purpose here. Take a look at chart:





I'm not sure we should mark all highs and lows like it's in the picture, but we can see a pattern of higher-lows & higher-highs from February 2006 to May 2008 and then breakout (previous long-term low (ca.5600) has been broken). Currently, the BDI Index is in clear downtrend.

Warren Buffett prepares to buy 3 million USD of General Electric (NYSE: GE) preferred stock at a guaranteed 10% dividend that are callable by 2011 (here). That's a second major Buffet's investment in current market.

Sources:
[http://www.marketwatch.com/news/story/ge-sell-12-billion-stock/story.aspx?guid={82385698-8517-4ADA-8436-83DB02638BD7}]
[http://stockcharts.com/h-sc/ui?s=$BDI&p=D&st=2001-01-01&id=p85912874928]
[http://investmenttools.com/futures/bdi_baltic_dry_index.htm]
[http://en.wikipedia.org/wiki/Baltic_Dry_Index]
[http://www.wikinvest.com/concept/Baltic_Dry_Index_(BDI)]
[http://seekingalpha.com/article/97969-alternative-bailout-plan-good-and-bad-ideas]