BROAD STOCK MARKET UPDATE (5:20 pm EST)
With the DOW and S&P 500 continuing their bullish rise this week many traders and investors may be tempted to go long now so as not to be "left behind" on a major rally. Alternative Investor strongly advises caution here. Technical analysis as well as cycle studies and timing factors all point to a correction right now. The rise in the DOW has been especially steep and the market is looking overbought. Also note that the NASDAQ is not yet making new highs for the week and is much less bullish than the DOW and S&P 500 at the moment - a further sign suggesting caution. We will therefore continue to wait for a short-term correction and a better entry point into this market.
I would like to make the comment here that the methods I am using to analyze financial markets work best when the markets are freely and openly traded with no interference from the government or powerful individuals and groups that try to influence a market in one direction or another. Unfortunately, we probably have to accept the fact that market manipulation has become a lot more common in our current financial times and will thus cause some distortions in the natural rhythms and cycles of the economy. This is especially true of the broad stock market and the DOW in particular, as it is often thought of as the "pulse" of the economy. In my observations of the broad stock market over the last five or six years I've frequently seen behavior in the DOW (based on chart analysis patterns) that strongly suggests it is being artifically propped up. This tends to manifest as a lessening in the frequency and depth of downward corrections. Again, this type of manipulation is probably more common in the broad stock market than it is in other markets such as gold and silver (although these markets can be manipulated as well). My main point here is that even though market manipulation may distort technical, cycle and timing patterns (as in delaying or diminishing a correction) it usually does not obliterate them, and we can still make valid trading decisions with the data as we factor the distortions into the total equation.
With the DOW and S&P 500 continuing their bullish rise this week many traders and investors may be tempted to go long now so as not to be "left behind" on a major rally. Alternative Investor strongly advises caution here. Technical analysis as well as cycle studies and timing factors all point to a correction right now. The rise in the DOW has been especially steep and the market is looking overbought. Also note that the NASDAQ is not yet making new highs for the week and is much less bullish than the DOW and S&P 500 at the moment - a further sign suggesting caution. We will therefore continue to wait for a short-term correction and a better entry point into this market.
I would like to make the comment here that the methods I am using to analyze financial markets work best when the markets are freely and openly traded with no interference from the government or powerful individuals and groups that try to influence a market in one direction or another. Unfortunately, we probably have to accept the fact that market manipulation has become a lot more common in our current financial times and will thus cause some distortions in the natural rhythms and cycles of the economy. This is especially true of the broad stock market and the DOW in particular, as it is often thought of as the "pulse" of the economy. In my observations of the broad stock market over the last five or six years I've frequently seen behavior in the DOW (based on chart analysis patterns) that strongly suggests it is being artifically propped up. This tends to manifest as a lessening in the frequency and depth of downward corrections. Again, this type of manipulation is probably more common in the broad stock market than it is in other markets such as gold and silver (although these markets can be manipulated as well). My main point here is that even though market manipulation may distort technical, cycle and timing patterns (as in delaying or diminishing a correction) it usually does not obliterate them, and we can still make valid trading decisions with the data as we factor the distortions into the total equation.
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