<font color=green>The Dow and general market musing.
Shack, I've reduced my SI thread reading to just one or two threads, and I'm pretty selective with who I read. You're on my reading list.<gg> Past performance counts.
Here's what I see.
Dow One Year with Trend Lines
stockcharts.com[r,a]daolyiay[dd][pb20!b200][vc60][iud20!uyb20,2.0!lc20][J3183514,Y]&listNum=38
The CCI suggests the market is overbought,
but the price is breaking above that June to January downtrend line. That is bullish.
Price above the 200 day MA. Looks good.
Daily Close Signal Six Month Chart
stockcharts.com[e,a]dallyimy[dc][pb20][vc60][iud20!ub14!ll14!la12,26,9!lp14,3,3!lc20][J1082377,Y]&listNum=10
Stochastic in the overbought zone,
but price looks to be solidly above that 10,000 support.
A break above the 10,260 resistance would be quite bullish, I think.
ADX is hinting at the start of a new trending period and MACD is giving bullish hints. If these are confirmed, this rally could have legs.
Dow Weekly Signals Three Year Chart
stockcharts.com[e,a]wallyimy[df][pb20][vc60][iud20!ub14!ll14!la12,26,9!lp14,3,3!lc20][J1399024,Y]&listNum=10
This is the reality check chart.
The Dow is still well within the almost-three-year narrower down trend channel on this chart.
If you look at that last upswing in Stochastic, that represents unpredictability to me. Sharp turns like that usually mean something intervened with the normal course of the market. In this case, I don't think the cause of this turn was evident to all market participants. That bothers me.
In summary, about the Dow, based on my reading of the market fundamentals, I am really surprised by this rally.
Based on my reading of the charts, I'm not too surprised as I've been saying for quite a while now the Dow looked unpredictable.
I now have to wait for resistance or support lines to be broken, from here. On the weekend, I said there was a slight upward bias to the Dow. I think that bias is increasing.
Now, a few market musings.
This has been a tough period in which to stay patient.
Some stocks have had some great gains, some stocks have had dramatic losses, but in many of those cases, I couldn't predict the price move from the charts. Over and over again, on news, a stock pops at the open and then trades in a small range all day. The poor buggers who've been holding for months, as their equity withered away, suddenly feel justified and relieved. Then next day, the gradual slide begins again. It's like some cruel form of Chinese water torture.
Risk/Reward
As I see it, the markets have no fundamental reason to rise, at this time, but they may anyway. If they do, I'm holding enough diversified positions to benefit, and I'll add to those positions in coming months (about June maybe) if this becomes a sustained rally.
The risk is that some catastrophic event, or reality, hits the market. I'm holding some fairly decent positions in gold, just in case this happens.
I think the reward from being fully invested in Dow Industrials-type stocks is outweighed by the risk. The potential reward should accrue gradually (there'll always be time to get on if this is a true, sustained rally), but the potential risk could be devastating.
Cush |
