Market was undergoing a pullback last week and on Friday it got the news (jobs report) which it needed desperately to make the bounce near MA(50). How far will this bounce go along and What should we be prepared for? BPNYA is still above 70 mark and last week it crossed EMA(30) triggering SELL signal. Lately volatility has been rising due to which we saw markets volatile decline. Unless BPNYA falls below 70 mark NO BUY signal will be generated by our system. On NYSE daily chart we can clearly see a pattern, every time market breaks through MA(50) line (shown by blue line) it quickly bounces back. We might get a bounce comparable to earlier HIGH or even surpass it briefly, however DO NOT get tempted as its too risky. On weekly NYSE chart, not much has changed. Market appears to be continuing its BULL trend for now. What is really happening here?
Market has relentlessly continued its trend of making NEW HIGHs in last couple of months and at some point prone to start a meaningful correction of 8-10%. However, since most people are expecting a correction, most likely market will do exactly opposite. This causes frustration and at some point people start giving in and get in the market at levels where it gets risky. As soon as most people are in the market and fully invested then comes the shocking surprise. Market starts the long overdue correction causing pain to many know as "maximum pain theory".
What does it mean for our long term investments?
Market appears to be in BULLish trend, however be cautious and alert... Comments are closed.
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