Many commentators are asking whether this market is showing real signs of exhaustion, suggesting that it is time to get out, go to cash, and wait for a serious correction or collapse to jump back in.
It was a choppy earnings season but despite its volatility the bull trend remains very much intact. The Dow Transports and Dow Industrials both are trending upward with higher highs and higher lows and both indices are in congruence.
On the Dow Industrials, the Dow Transports, the McClennan Oscillator Index, the McClennan Summation Index, the Advance-Decline Line, the market is giving “buy” signals this Tuesday.
While I realize that fundamentals are important to investment success I also appreciate the relevance of technical analysis in gauging investor sentiment and in timing entry and exit points.
Despite the recent market pullback Dow Theory divergence continues as can be readily observed from the Dow indices comparison chart below. Divergence is an indication of market instability and investor uncertainty.
For the last 10 trading days (two calendar weeks) the Dow Industrials have been trapped in a tight trading range. In Dow Theory parlance this is called a “line”. The longer this line progresses the more technically significant the breakout trend will be for savvy traders to exploit.
The price point to watch on the Dow Industrials is 15750 and on the Transports it is 7100. If these levels hold solidly over the next few days then we will more than likely have a year-end rally.
The issue of successful stock market investment affects us all. Even if we are not directly engaged in the industry, all of us will need some form of pension to fund our retirement. Whether we like it or not most of our retirement funds will find their way into the financial markets.
You might think following Angela Merkel’s electoral success last month all was stable in Euroland; unfortunately, nothing could be further from the truth. I have it from reliable sources that Euros continue to flood out of Europe...
Research for the piece I wrote on Social Credit helped me discover that it was in the environs of Detroit that the “American Dream” was made manifest by non-other than Henry Ford.
Ireland’s presidency of the European Union ended last Friday. One of its last acts was to finalize the banking policy whereby future troubled Euro banks will be restructured using the Cypriot “bail-in” model.
The banking situation in Europe continues to deteriorate rapidly. As a measure of the ongoing crisis the “ Bail In” option used in Cyprus is actually being made European Commission policy.
What a market. Even the most experienced traders that I know are having a difficult time getting a handle on what is happening. Wednesday’s market action caught a lot of folk napping.
Late last month one of the most important speeches on Europe ever made by a British Prime was presented by David Cameron to a central London audience at an event hosted by Bloomberg. The speech sent shock-waves throughout the European establishment. Salient excerpts are quoted below courtesy of “The Independent.co.uk”.
Ireland took over the presidency of the European Union on January 2013 for six months. Prime Minister Enda Kenny is thus in a unique position to try to find a solution to the banking crisis that has bedeviled Ireland since 2008.
The stock market had been basically playing a game of wait and see since the American presidential election but now the momentum is moving with the bulls. By all accounts the positive mood should continue notwithstanding any shock from Congress and the budgetary negotiators from the Whitehouse.
The technical picture in the market continues to deteriorate. The divergence between the Dow Transports and the Dow Industrials has been resolved with both indices now adopting a bearish stance.
