As expected market did drift down, however it has not yet marginally broken the lower low established in August. Let's see if charts are providing any guidance in this volatile situation.
Once the election results were out, market reacted to it. Immediately Fiscal Cliff came into spotlight and dead lock in congress is dragging market down further. What should we expect in next couple of weeks?
What a turn around!!! Last Wednesday things were really looking bad, for markets it was make it or break it. Thursday afternoon in Europe, ECB President Mr. Draghi re-affirms that any necessary actions will be taken to save EURO, especially when Spain bonds interest rates were rising. AND then a major reversal, US markets gaped up crushing anyone who was shorting this market. The momentum continued into Friday and now we are back in the game!!! What to expect next? Is this BULL rally for real!!!
Last to last Friday we got a BUY signal and then following four days a continuous market decline, does not provide confidence, does it!!! And then a relief on last Friday BUT are we out of the woods yet?
Last week market was in holding pattern except on Friday when it made a move UP (in anticipation) but on less volume. The new democratic party in Greece won the election and at least for now Greece is here to stay in Euro-zone. Most likely we should see a relief rally in markets across the globe. However, beware as this rally might be temporary and we need to be cautious...
Market got a nice bounce last week but is it here to stay!!! Greek elections are in next 10 days which will decide the fate of Greece to be part of Euro-zone. Jobs growth in US is unfortunately not gaining traction there by suggesting economic recession ahead if nothing is done. What shall we expect in near future?
Market is in correction as of now without any doubt. Does it mean that the BULL trend which started earlier this year is coming to end!!! For now, this looks like a correction. The real question is how far this correction will continue? There is no way to identify how long market remains in correction mode but there are ways to know when it comes out of correction....
Last week showed us, how market can change directions. What seemed like a rebound has changed into market forming a range. Most likely market may spend next couple of weeks/months in this range. Any time market forms a range, it will keep bouncing around until it can find a directional trend. So how do we know when to enter?
It is clear by now that market is experiencing correction. As volatility increased, we saw wild swings in market which is very common especially during earnings season. So what should we expect!!!
All it takes is a week and market scenario changes. Last week was very volatile with wide swings as expected, but fortunately our history teacher (BPNYA Index) guided us well and we were out of the market before all the action unfolded. Remember, all we are trying to do is increase our "odds of winning" and "protect our gains" as well as avoid "major losses". Follow the guidance provided by BPNYA and in most scenarios we should do well...
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