All in a day's work

Have you ever wondered why do companies always seem to declare liquidity problems only when it's too late?

The last time I shared my opinion on a bottom is on 7th Jan 09 when Dow Jones seems to break a resistance of 8900. But in that post I did not refer to the charts. To read about my previous post, click here

However, this time round, I'd still see this as a potential rally but not the end of the bear run.

I've used arrows to indicate technical support formed in recent times and highlight the levels with a horizontal line, as you can see from the chart. This time round, I am in the opinion that we should have the "strength" to test 7,500 again, the resistance line formed since Aug 08, a breach of this resistance line would then lead me to rethink abt a sustained rally. Previously, a rally don't last longer than a week, 7 days and at this current time, we have about 3 days left.

I've removed all indicators in my analysis as I think indicators do not work in the current market. The tracking of the change in sentiments by indicators is too slow, in a way. Nevertheless, I do hope that most of you saw the bottom and caught the rally the last 2 days.

Finally, this is just my opinion and open for discussion/critics.

“I AM the most offensively possessive man on earth. I do something to things. Let me pick up an ashtray from a dime-store counter, pay for it and put it in my pocket—and it becomes a special kind of ashtray, unlike any on earth, because it’s mine.”

The endowment effect is a hypothesis that people value a good more once their property right to it has been established. In other words, people place a higher value on objects they own relative to objects they do not.

The endowment effect was described as inconsistent with standard economic theory which asserts that a person's willingness to pay for a good should be equal to their willingness to accept compensation to be deprived of the good. This hypothesis underlies consumer theory.

‘Thaler (1980) coined the term “endowment effect” to refer to the finding that randomly assigned owners of an object appear to value the object more than randomly assigned non-owners of the object.

Example: Look around your house. Pick something. How much would you sell it for? How much would people really pay for it? How much would you pay for something like this at a second-hand store?