David: Key areas to watch on that chart are/were the upper rising trend line of the rising trading channel since 1974. That trading channel has acted as resistance and support for 25 years.
The upper trend line acted as resistance and repelled the increased incline of the ascent of the Market since late 94. The Market rose above the upper trend line twice from April to July 98, before acknowledging the resistance and pulling back into Oct 98.
After, the Market pulled back to Oct, the following rally increased the degree of ascent and rapidly rose back to that trend line and broke through it.
One could view that break and several ways, two ways could be:
1) This could be the beginning of a new bull leg up, at even a more rapid ascent.
2) This could be the beginning of the end of a multi decade long bull-run, ending with a blow off top.
Problems with number one: The composite Index is extended above the 55-week SMA. The rally since the Oct 98 low has gone even more vertical at a time when interest rates and gold have been climbing.
Note: In 87 the rates rose with the Market for about 9 months.
To All: For me this is a time to be cautious with retirement money, college tuition money, home down payment money, you get the picture. However, retail accounts could be more aggressive if you are long and sitting on a profit hold, but be nimble. If not already long, wait for confirmation of the move up. If you have speculative money (I call it day trading money, money you can afford to loose.) take advantage of the volatility. Just make sure the speculative money is not the bulk of your nest egg. I recommend 20% or less. And always have a game plan for each and every investment. Take steady profits in your day trading and do not always try to get rich on individual trades.
Those that get rich on individual trades usually loose it all the same way.
Regards,
LG
Disclaimer: My posts are my opinions only and I reserve the right to be wrong on occasion. Do not base any investment decision solely on anyone's views or analysis. Do your own research and take responsibility for your own investment decisions. |
