Will this September be different from past Septembers?
As most of us know, September is historically the worst month of the year for the market. However, I'm of the opinion that this September could be different. I reserve the right to change my mind quickly of course but, I'm seeing strength in the markets and not weakness.
In looking at a chart of the DOW, I see that we are on the verge of taking out the end of July high. What makes this even more significant is that the price is above the 50 day moving average where it wasn't back in July. In July we were heading into resistance, heading into September it's support.
Take a look at relative strength! We have a positive divergence in relative strength. Last April, when the DOW was much higher, relative strength was about where it is now and we're over 300 points shy of the April high.
For those who follow the CCI indicator, a move above 100 is usually a buy signal when other indicators support higher prices.
Here's the daily chart.
stockcharts.com[h,a]daclyiay[pb50!c20!f][vc60][iut!Lb14!Ld20]&pref=G
In Weinstein's book, "Secrets For Profiting In Bull And Bear Markets," he emphatically states that one invests on the bullish side when the prices are above the 30 week moving average. This constitutes a bull market over the longer term.
The DOW has closed above the 30 week moving average.
Also note the Stochastic. The Weekly Stochastic has flashed a buy signal. This is a picture perfect long term oversold scenario.
The MACD is very close to flashing a buy signal.
stockcharts.com[h,a]waclyiay[pc30!f][vc60][iut!Lh14,3!La12,26,9]&pref=G
In the next "weekly" chart, the Rate of Change (ROC) is very close to confirming a bullish long term buy signal. A cross above zero will confirm.
And, the OBV indicator is confirming that there is more buying demand than selling demand in the market at this time.
stockcharts.com[h,a]waclyiay[pc30!f][vc60][iut!Lm12!Lg]&pref=G
Volume has been lighter than I'd like to see but, with all of the other indicators suggesting higher prices, I've been 100% invested as I have mentioned to Jim P and KB in PM's.
All of these indicators could fall apart once we get into September hence, I will maintain tight stops just in case. For now, I'm 100% invested and will go on margin if we get any follow through in the coming week. Otherwise, I'll lock in my profits and be thankful that I took advantage of the recent runup.
dabum |
