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Where the Markets Are Headed
Latest Activity: on Monday
Fibonnaci in Nature
Started by Terry H. Last reply by Terry H Nov 5, 2013.
Started by Terry H. Last reply by Brian Augustine Nov 5, 2013.
Started by Terry H. Last reply by Terry H May 7, 2013.
Started by Terry H. Last reply by Terry H Apr 18, 2013.
Posted in on July 18, 2014 - 11:15am
Well, the market finally found something it couldn't shake off -- at least not right away -- on the geopolitical front. Normally, this wouldn't be a big deal, but an overbought, somewhat nervous market can react to this type of news dramatically, and it did. So what is the real overall effect?
First of all, the $SPX chart is still bullish and in an uptrend. The support level at 1950 has not been violated. I'd say that this is now a quite important support level. If it is broken, one could reasonably say that the $SPX chart is no longer bullish. Below 1950 there is support at 1925, and that would be the next level to look for.
Equity-only put-call ratios remain on sell signals, as they have for several weeks now. There was some wavering in the signals earlier this week, but Thursday's big slide has them rising again. As long as they remain in an uptrend, that is bearish for stocks.
Market breadth has been poor of late -- even on days when the market has been up. As a result, our breadth indicators remain negative.
Volatility indices ($VXST, $VIX, and $VXV) behaved most violently on Thursday. $VXST blasted 6 points higher (+58% wow!), and $VIX was up 3.54 (+32%). The $VIX close above 13 was a bearish sign and definitely brings up the possibility that $VIX will trend higher for a while -- a bearish factor for stocks. A close below 12 would return $VIX to a bullish state.
In summary, for all the panic in Thursday's trading, it didn't really show up in the indicators except for the change in $VIX to a bearish status. So at this time, we have sell signals from breadth, put- call ratios, and $VIX. But what we don't have -- and this is extremely important -- is a breakdown below support from $SPX. Hence we are not getting bearish unless support at 1950 is broken.
Here's a log chart of the DJIA from 1918 to 1932.
If you want to understand why the Fed's monetary policy has not been working, read this paper read last year at the San Francisco Fed:
DJIA Inflation Adjusted Chart since 1982 to Oct 23, 2013.
I'm bullish on the market into year end - Gold is looking strong again as well!
A thorough talk on EWI's interpretation of where we are in all markets and the economy and why from a historical perspective with charts, and an explanation of why they didn't think the US stock market would go this high.http://www.elliottwave.com/club/analyst-videos/ewi/steve-hochberg-1...
Rhee, for a noobie like me, I was wondering if you could possibly post a current stock chart that shows the sweet spot you are talking about. I feel like I have a good number of tools at my disposal to make an informed decision but I'm not quite there in terms of using them correctly. I understand that "the trend is your friend" and not to "catch a falling knife" but I'm still having some trouble making wise decisions. Any insight would be appreciated. Thank you!
Same guy who said "The subprime mortgage crisis is contained."
"Bernanke reportedly told a group of bond dealers and investors that, unlike some other Fed officials, he doesn’t see current bond purchases as creating an asset bubble."http://www.marketwatch.com/story/bernanke-may-push-back-against-haw...
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