May
27
Written by:
Steve Patterson
5/27/2010 2:37 PM
Stocks Recover But The Trend is Down
Stocks have held in a good range this week with the Dow Jones Industrial average moving between 10,200 and 9,800. Longer term, the indexes are still in a down trend until there is a good break to the upside. The current trend started on May 4th with the average breaking below 11,000 and has continued downward to the low this week of 9,800, Due mostly to fear that the Euro will no longer be a currency and European countries will have serious debt issues for years to come. One could say that the five week chart presents a bottom formation already but I would consider today’s improvement as the first leg of a bottom formation on a three month chart.
If you examine the 3 month index charts on the home page of ClearStation.com that is precisely what you see, a single leg of a ‘W’ bottom formation. Wait for the sell indicators to move to a hold position before considering any type of position purchase. When the trend indicators at ClearStation.com change to green, you should be almost fully into your position. I still prefer the ProShares Ultra S&P 500 (SSO) for long positions and the ProShare UltraShort S&P 500 (SDS) for short macro positions. They are trading in the after markets and are fairly liquid so you can enter and exit positions without worry.
There was more good news in economic reports this week which bodes well for a turn-around in the indexes. Existing Homes Sales were better than expected in April. Additionally Consumer Confidence, the Housing Price Index, Durable Orders, and New Home Sales were all better than expected. On Friday there will be readings on Personal Income, Spending, Chicago manufacturing, and Consumer Sentiment. Keep your eyes on the charts daily for a signal that the indexes are breaking up.
7 comment(s) so far...
crm software
Growth, inflation, and currency pegs are competing forces which cannot all be controlled. However, managing all three can mitigate the volatility in any one.
By crm software on
6/2/2010 5:31 AM
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Re: Stocks Recover But The Trend is Down
I agree with you that we can consider today’s improvement as the first leg of a bottom formation on a three month chart.
By payday advance on
6/2/2010 9:23 AM
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Re: Stocks Recover But The Trend is Down
Though the trends are much better than before. When is it expected that the up and down graph will sustain a good and smooth value?
By Sports News on
6/8/2010 1:07 AM
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Re: Stocks Recover But The Trend is Down
All I can say is that it is not actually the trend is down. If you look at the 5 year chart on DOW Jones Industrial Average: finance.yahoo.com/echarts?s=^DJI+Interactive#chart5:symbol=^dji;range=5y;indicator=volume;charttype=line;crosshair=on;ohlcvalues=0;logscale=on;source=undefined
You will notice that we are still part of the bull trend that started on March 2009. Based on chart provided on that yahoo finance data, it is expected that Dow Jones index will climb until it reaches the resistance level of around 14000.
But if you look very closely, on November 2009 until February 2010, the price level at 10000 has been tested twice as the support, so it means that if in the coming weeks Dow Jones will go down significantly below 10,000 (say around 8000 or 9000), it means that a bull trend is now under question, and most likely there is a strong trend reversal to bear. This may or may not happen, depends on the situation of US markets as well other factors.
By online stock trading tips on
6/11/2010 11:33 PM
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Re: Stocks Recover But The Trend is Down
The market is looking increasingly toppy now. One way to benefit from a decline or at least hedge is to short an ultra long stock like UYG. You'll get the double benefit of decline in the price, and decay.
By TradePlacer on
6/13/2010 10:18 AM
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Re: Stocks Recover But The Trend is Down
The market is still making me money so that is really all that I care about. I like that the trends that we are in right now are easy to predict and that buying at the right time has never been easier when my window stays open for minutes instead of seconds.
By Ideas to make money on
6/18/2010 10:14 PM
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Re: Stocks Recover But The Trend is Down
I completely agree with you thanks for sharing this helpful and valuable information with us and I hope that we will more valuable information from you.....
By Personal Finance Planner on
7/1/2010 3:46 AM
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