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  Reading a Stock Chart will give you a better understanding of the...
  Greek Crisis Enron Fraud - Charts vs. Analysts
  Credit Crisis Infamous Internet Bubble
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Rob Perrego

Who is Robert Perrego?

When Worldco's Wall Street traders needed to know how to read a stock chart, they went to Robert Perrego.

Robert Perrego was a Managing Director and a Proprietary Equity Trader at Worldco Inc. for five years. Using Technical Analysis and Chart Reading techniques, Robert profitably traded over 100 million shares of stock worth billions of dollars for his personal account.

Robert delivered weekly lectures on Technical Analysis for Worldco's other traders. The tapes of these lectures became required viewing for all new traders at the firm. These videos inspired the creation of the educational package now being sold at StockTradingCards.com.

Robert's Full Bio

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The Greek Crisis
     

The Dow Jones Industrial Average peaked in 2010 at 11,258.01. The low trade in March of 2009, after the Credit Crisis meltdown, was at 6469.95. This bounce was a 74% move, and in any market that is one big bounce.

The return to the 11,000 level had market participants feeling more secure. Many people were equating the 'V' bottom in the market with a possible coming 'V' recovery in the economy. The Credit Crisis was triggered by the failure of Fannie Mae and Freddie Mac, which then ricocheted into defaults by private mortgage companies and was further magnified by the use of derivatives in the mortgage bond market. By 2010 this Crisis seemed to be in the rear view mirror after federal intervention in the markets which included massive government bailouts.

As Warren Buffet once said; "When the tide goes out you get to see who isn't wearing any clothes," and the resulting worldwide recession exposed the ongoing budgetary problems in economies in the European Union. These economies had been running on unbalanced budgets and excessive social spending for far too long. These economies include Italy, Ireland, Spain, Portugal, Hungary and Greece.

stock chart anlaysis of the greek crisis

The thin blue uptrend line started on February 8th after a pullback in the market from the December 2009 highs. This steeper sloped trend line broke on March 25th but the market continued higher. What limited the markets continued upward move was an extended uptrend line which dated back to August 17th of 2009. Twice the bull run tried to break above this line, which would have been quite positive for the market.

On April 27th, the day after the Dow Jones Industrial Average traded its 2010 high, Standard & Poor's cut the bond ratings on Greece's debt to junk status and lowered Portugal's rating. In reaction to this rating cut, the U.S. stock market dropped 1.9% and the top was in. This downgrade to a foreign country and the resulting drop in our domestic stock market shows how you need to protect your portfolio from threats 'both foreign and domestic." Knowing how to read a Stock Chart can help you do this.

The U.S. stock market bounced back in the two days after the S&P downgrade but, once again, could not take out the same extended uptrend line from February 8th.

A few days later the market dived straight down as more and more bad news came out of Europe. On Thursday May 6th, a large sell order on the New York Stock Exchange crushed the market and the size of this sell order was so large that it caused trading triggers to trip. The NYSE shut down their exchange and market players, desperate to get out, continued to execute sell orders through the thinner electronic 'off-exchange' systems. This panic and sytematic problem in the trading system caused the 'Flash Crash.' The intra-day drop of 998 points sent shivers through the market even after the day closed at down 'only' 347 points. Needless to say this got people a bit nervous and changed the psychology of a lot of market players.

The following trading day, a Friday, saw even more selling. Luckily the weekend was there and this gave politicians time to slap together a $1 Trillion rescue package, which stopped the bleeding and the market bounced back the following week.

As can be seen on the chart, this bounce back was halted by yet another extended uptrend line. This other uptrend line dated back to July 10, 2009. It is no coincidence these extended trend lines have an effect on the market. Computer trading programs use them and so do professional traders. Extended trend lines have a significant impact on trading, even after these lines are broken.

Two days later the market tried to take out this extended trend line to the upside but failed to hold above it for more than a few days. This was the first SELL signal the charts gave. While governmental officals around the world, economists and analysts could be heard saying the $1 Trillion package might work, the charts told you it was failing in the 10,800 area - a mere 3.6% from the top trade.

The red downtrend line shown on the chart is now the most important one on this chart. A rebound to this line and a failure to break it to the upside will give yet another major SELL signal.

This situation is still developing at the time of the writing of this page (May 28th, 2010). Knowing how to draw these trend lines properly can get you out of stocks at a higher price and also they can let you know when to start to watch the market very closely and when to get worried. The Wall Street stock analysts can tell you when stock P/E's are low. How low were stock P/E's at 9,000 in December of 2008? How much lower did the market go after that? (6,000's) Wouldn't you have liked to know how to read a stock chart then?

How low this market goes as a result of the Greek Crisis topping off the market, or what will happen next is anyone's guess. Do you think it is time to be able to read what the market is telling you? Do you think it is time to learn to read a Stock Chart?

 

 

 

 

 

 

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