The Stock Market: Shifting Momentum

THE STOCK MARKET’S SHIFTING MOMENTUM

What we’ve been witnessing with the Stock Market these last months (beneath the hype and headlines) is the shifting of price momentum. I’ve outlined this process with the red arrows on the chart following . . .

djia

This has slowed this previously hyper-trending market’s advance to a non-trending, sideways entity.

Essentially, the market has become (depending on one’s perspective) either ‘boring’ or ‘precariously balanced on a cliff’. Perspective, however, is very point-of-view slanted and, is therefore, non-objective.

Perspective is emotion-laden (because of it’s point-of-view nature) and not to be trusted in the investment or speculative arena. It’s important to rely on objective means of evaluation and to use those tools consistently.

While the popular ‘points-of-view’ about this market are displayed everywhere on the net it seems, almost no one discusses the upside potential to this strong market.

Here’s how things look to the upside from this perspective (using opinion-independent tools) . .  .

djia2

The usual trap before breakouts to higher levels consists in taking out the previous highs (implying an immediate higher price breakout). However, this event alone will not be enough to indicate the renewal of the strong trend upwards.

Instead, don’t expect the trend to be seriously established until price goes through 18,300 on the DJIA on the upside.

This price area will keep one out of the price-choppy action which comes with sideways moves.

As for the downside break (which far too many are expecting – not a good sign), the same trick will likely be attempted in reverse. Lower lows taking out the previous lows implying (the ‘Trick’ again) that prices are going to break down seriously and immediately. They won’t, however, on this basis alone.

It will take even lower prices to lock that into place. Let’s take a look at the downside support . . .

djia3Keep in mind the slowing momentum of the Stock Market, which should still be viewed as only a pause in the trend until proven otherwise by prices penetrating the support area presented above.

Don’t be taken in by any quick price moves at either extremes (of high or low) and, instead, allow a little price ‘buffer’ space both above and below our present sideways price range. George