Did the capitals catch your eye? No, this is not an eye exam. Since this is a political and economic blog, you can quickly eliminate many choices. To save time and space let me get to it.
The Market
It has been volatile lately, and in a previous piece I pointed out to you how big money is looking at the market under the eyes of greed and fear. Individual money managers realize that there are less than 60 trading days left in the market for the year. Why risk my 30% profit in Apple when I see another media giant, Facebook already at a loss for the year? Big Blue, IBM is touching the low end range of its 2008 low and GE continues to reveal excessive debt, hidden book looses and cut its dividend. The manager is thinking, sell. Take profits and if things settle down, buy back at a lower price. Good logic. You can never lose if you take profits before pullbacks.
There is another point to be considered. I found when I first entered the market many years ago that charting was more accurate and easy for me to understand. One could block out the name of a stock and just read the chart to get a feel to where the company was going.
The problem with charting is this: half of the market and mostly, the big firms like fundamental knowledge of a corporation before placing money into it. For example, if interest rates are in the normal range, the banking industry will do well with the spread in the cost of money. If the crack spread in oil is right, refiners will clean up. If a banking firm is dealing exclusively with a company that needs money for a new gismo that will sell like crazy, they're in. This is the way the market works. Today, I like to begin with charts and add whatever limited fundamental aspect that I know to make a decision to invest. I do have one problem in investing. I'm pro gold and the market is pro fiat.
Nevertheless, human nature still effects the market and one truth about charting is this: a stock whether is in an up trend or down trend will always test the point where volume meets a transition point. At present the charts indicate that the market is heading down to meet the low of the year back in February.
As of last Friday the following prices for the main indexes were:
Friday February low
*Dow 24,688 23,400
*S&P 500 2658 2532
*NASDAQ 7167 6630
*Small cap 1483 1436
Those targets could be met by the end of the month or early in January, but they will be met. The point that you should entertain is the volume on the day of the test. If it is lower than the February low, the test points to a higher market from that point. If the volume is higher than back in February that says the market will continue downward to the next level of support or resistance. Keep your EYES on the Chart.
No comments:
Post a Comment