Market has seen unbelievable weakness in the month of famous and much dreaded October, it was pretty much a straight downhill for whole month of October 2018.
In the first 18 trading days in October, we lost 337.37 points in S&P 500 or DOWN 11.47%.....a very fast pace of decline...
Once October ended, in last 9 trading days S&P 500 has gained 171.47 points or UP 6.57%.....
Since beginning of October when we were sitting @ all time high of 2940.91 in S&P 500, we are still down 159.90 points or 5.44% as of Friday's close.
NOW...the question is.....
Are we going to test the support again or Friday's slump to 200 DMA in S&P 500 which we held and moved UP is enough....
Chart readers / technicians are very excited about reverse head & shoulders which we have formed and are predicting once in a lifetime opportunity like bottom of 2009....
Technicians are correct only 50% of the time no matter how well they read their chart, so tread with caution on any prediction of this TAPE.....
World economy is definitely in turmoil partly due to natural economic cycles and accelerated by US / China trade tensions.
Oil slump is very puzzling, its in a severe straight line slump, not seen as a pattern.
Oil is loudly saying " all is not well economically speaking in this world "
IF we believe oil scenario, then Federal Reserve is " totally on wrong path of increasing interest rates "
IF interest rate in US are near top of the range, then it will give lot of room for equity to expand.....
US Feds are known to wake up to new reality of slumping oil prices & slowing worldwide economic activities.....
SO..IF FED back tracks on its language, we MAY have formed a sustainable bottom in market.
In my opinion, Fed is controlling this market in US, IF they remain hawkish, we go down to make new lows.....
Good luck with your own analysis and your comfort level.
BLOG does NOT give buy or sell.
Saleem
4 comments:
Hi Saleem,
Last week: -0.25% (YTD: +34.35%)
It was a nearly flat week for me as I made some good trades earlier in the week, but then lost my gains after re-entering stocks only to have them fall on Friday. I am still not totally confident in any moves, leading to my multiple in and out positioning. I feel better that some early signs of inflation are moderating (except for the PPI data which may be a little lagging) coupled with the prospects of slower global growth. This should eventually put the Fed back on hold, which is key to a more sustained rally in many of my high growth stocks. For now, I unfortunately may be positioned incorrectly again and will continue to evaluate the technical and sentiment conditions (because fundamentals get lost often in the shorter term).
Holdings: LULU SAIL TENB CSOD VRNS AVLR VICR, PRNB NIU TRIL, cash 20.9%
In the end, I think you are right Saleem, the Fed holds the key to the market right now.
Stocktrader
Hi Saleem,
Bought SPLK @ 95.76
I expect a good quarter and guidance still from these guys and valuation has gotten much cheaper recently.
Stocktrader
Hi Saleem,
Bought HUBS @ 126.27
As it comes back into support, I thought I'd give it a try.
Stocktrader
Hi Stocktrader,
Good luck with SPLK & HUBS....another brutal day in market....
Saleem
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