Today’s Stock Market Actions Bring a Clearer Focus
While yesterday’s stock actions did not define a new downtrend (as mentioned in the previous post), today’s price moves and the fact that they were global in nature have given that signal clearly.
As the chart shown yesterday indicated; a change has now taken place upon the breakdown below 15000 on the DJIA. I wrote at that time that a price break below the green rectangle’s enclosing lower price boundary would be a signal of a stronger move downwards.
That’s exactly what happened today.
The point of that article was that it was this price point that held the most meaning for the DJIA, much more than the action shown immediately after Bernanke’s speech.
The range of yesterday following the speech was not significant, while today’s price movement did cross a new threshold and signals, at the least, an adjustment period with stalled momentum and, possibly renewed downward pressure.
As seen on the research chart I’ve placed above, we’re now at an overbought price area and a Triple Top area for the S&P 500 (which is a broader and more accurate index of sentiment).
Eventually, this market will come down. It simply must.
The time line for previous bull runs of 5-years is almost here as well
What I’d call to your attention though is that each of the previous two tops were, in fact, double-tops before their ultimate decline. This is typical of long-running bull markets. First, a steep decline, then, a turn up rally and finally, the exhaustion collapse.
But, you know, the 18-year history that this chart reveals shows that these market cycles are taking place IN SPITE OF market interventions by the FED. Except for a little increased volatility along the way during our latest bull market rise, each market rise looks very much like the others even to the point of time duration.
So, once again, after all of the headlines, after all of the hand-wringing and angst; the markets continue their patterns of rising and falling price cycles almost oblivious to politics and international tensions.
I don’t know about you but, I find comfort in that. – George
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