Market has taken everyone by surprise by a rapid recovery in last three weeks. In most parts, the gains came from testimony from FED chairman regarding fate of QE (regarding chatter about bond buying program every month). Earnings season will be winding down in next two weeks. Now the BIG questions is can this market sustain its momentum!!! What should we do? As we mentioned last week, we got our basic BUY signal (BPNYA crossing EMA[30] upwards) but since MA(50) is above MA(200), the move appears to be suspicious. Volatility ($VIX) is quite low and market is challenging OLD HIGHs. Daily NYSE chart below displays market nearing OLD HIGHs, the move from 8900 area came in quickly and market needs to pause a bit to sustain this move. However on weekly NYSE chart, we see a different picture. Divergence between price and MACD is visible and that's NOT a good sign. It happened in 2011 and we can see the outcome that followed in below chart. Will it be different this time? What does it mean for our Investments?
Market appears to be moving back into bullish territory but be cautious... Comments are closed.
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