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? Remember, we are in middle of Earnings Season and volatility is part of the game. Every earnings season, market exhibits this characteristics hence its normal behavior. All major companies declare earnings in first two weeks of the season which provides overall market direction for next couple of weeks. Depending on the taste of earnings, market experiences volatility which leads to wide swings. However, this time with earnings season we also have a flavor of Euro-zone bitter-sweet ketchup along with growth concerns from Chinese sauce. And don't forget to add US economic growth flavor to this dish. Sounds interesting yet!!! No reason to get panicky, lets see how our history teacher guides us. Below BPNYA chart shows that market should be moving higher and our earlier BUY signal is still intact. As volatility ($VIX) remains low, market tends to move higher but due to earnings season expect wide swings something like two steps forward, one step backwards. NYSE daily chart below shows how MA(50) & MA(200) acted as bounce board. In coming days, it might break 7900 resistance. However, the key thing to note here is the volume. Market rallied last Friday but the volume remains low which is a concern. Lets check out weekly NYSE chart, make your own judgement... Whats does this mean for our Investments!!!
401K: Based on our BUY signal, we should be invested in TOP ranked fund by now. IRA: Be invested in TOP ranked ETF however stay away from country ETFs, a bit risky these days but DO NOT forget to have STOP LOSS LIMIT. Stay focused and alert, Enjoy the party till it last... Comments are closed.
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