Category Archives: Stock Indices

The DOW Cycle Location 11/02/2018

In the last five trading days, the DOW was able to produce a relief rally that retraced half of the shock drop from 26951.81 to 24122.23.  But the S&P 500 and Nasdaq were unable to retrace 50% and the small cap couldn’t even retrace 38% of the down move.  Overall the market is weak and it is being popped up by the blue chips.  Apple’s earnings report has revealed that Apple is no longer the hyper growth company like it used to be.   Amazon’s 28% selloff from 2050.50 to 1476.36 also points to the difference of this correction relative to all the corrections since March 2009.

It would be enticing to try to buy the prior bull market leaders during this correction, getting a discount of the old expensive stocks.  But the fact is that many growth leaders in one cycle do not repeat in the next cycle.  For example, the dotcom leader Cisco never came back as a market leader even after 18 years.  We believe this October high is an import high that signifies the end of a super easy money policy.  The market will need some time to heal from the structural damage.  The October low will be tested again sometime in the future.

It will worth a while to sit out the market to observe future leaders before the market cycle low is confirmed.  There will be many stocks that will have super earnings growth but the stock price will not advance due to the general market weaknesses.  Those stocks are the candidates for the next bull market cycle.

Technically, the DOW was supported by the lower channel line while S&P 500 and Nasdaq have violated their lower channel lines respectively.  It has only been one week since the low was made.  It is way too soon to say that the temporary low is in place and the year end rally will start from here, although it is likely due to the timing with the midterm elections.

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The Dow Jones Cycle Location 10262018

The damage has been done.  It is confirmed that we are in the 4-year cycle high to low selloff phase.  A 4-year cycle high to low selloff can last anywhere 3-9 months or 2-3 years.  We will get more clarity after the quarterly closing on October 31, 2018.  

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The Dow Jones Cycle Location 10/19/2018

The DOW had an inside day on last Friday and it was also an inside week.  But the DOW was able to close firmly above the 30-week MA while all the other indices closed below it.  The market is appearing to be temporarily stabilizing by having an inside week. 

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Year End Rally Or No Rally

The stock market has suffered major technical damages across the board last week.  Historically midterm election years Octobers are downright stellar. These Octobers have been a time of turnaround, with 12 post World War II bear markets ending in October, including the most recent, 1987, 1998, 2001, 2002 and 2011.  Is the 2018 midterm election October an exception or will it follow the statistic to endow us a year end rally?

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Market Update 10/10/2018

The severity of the selloff today has changed the outlook of the market.  The important question right now is how long and how deep will the correction last.  Is it time to get out the market?  We are going to look at different indices an stocks to try to make sense of the madness.

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