What's going on with the market? (week 5)
The pattern continues with not much this week. We are in a solid downward channel right now...a highly volatile one. With this predictable pattern forming, we should be able to place a trade this week and win on the bounce. Let's go to the charts...which all look almost exactly the same this week...
Dow (all charts from Yahoo)
Dow continues to be in a downward trend, with not too much hope in sight. The best news here is that the moves are beginning to be predictable. What what we really are looking for now is a higher low. If we can see another sharp sell off that turns back into a rally before making a new low, then we can take that as a signal to get back in.
Same idea here, but a bit scarier. On this chart we actually see a slight widening of the volatility which shows even more fear in the market. Again we are looking for a higher low.
This chart showed some promise on the most recent low before the new low. But you can see the most recent low was not a higher low, but rather a double bottom. Which again allowed this stock to sink further to a new low. Yet again, we wait for a higher low and continue to add.
Here we may actually have some promise. If the nasdaq can hold this higher low, and then accelerate into a rally, then we should see another higher low on the next sell off. This would mean we have reversed the downward trend and provide a large tailwind for the market.
Basically all the charts look scary, but predictable...issue is that it's predictably down. Current risks remain almost the same. China Trade, Fed Rate Hikes, and the inversion of the yield curve. Yield curve inversion just means the yield on the 10 year bond falls below the yield on the 2 year bond. It means more people are buying 10 year bonds because they believe the overall picture is pointing more to recession and they want to protect themselves.
As always, God bless and may the odds be ever in your favor...
Also here's a disclaimer that you should read:
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