Sunday, 12 June 2016

Stock Market Breakdown Or Breakout ?

Do we have a stock market breakdown or breakout ? We have a mixed picture. Looks like Martin Armstrong might be correct. Money is going to go out of the Bond Market and into high quality American stocks, just look at the charts below.

The bottom 3 charts are of the Russell 2000 going counter trend to the high market cap stocks. the Russell 2000 is made up of the speculative companies with no yield...

As a rule I look for divergences in the market place. A divergence in small companies versus large companies is telling us something... something to think about. When there are divergences, sometime down the road the change that takes place is painful. Just remember to play the patterns.

As a disclaimer, I'm just day trading 2% of the portfolio with 98% cash. Experience has shown me to sit back and wait while the indecision in the market place sorts itself out.

  • So does the Russell 2000 (low market cap) go down while the high market cap goes up?
  • Or does everything go down?

The chart above is TLT indicating a possible ending wedge, possible top in July / August. Looking at buying some PUT Options on it end of July. Bill Gross is calling the Bond Market " A Super Nova" super nova's blow up and take out everything in it's way. 

The chart above is the Dow Jones Industrial Average, with a couple of patterns:
  • The price is still in the channel.
  • The price broke down and made it back to the channel.
  • The price broke out of resistance, retraced and made a bull flag, then broke out of the bull flag. So based on the patterns, need to be bullish on the Dow Jones Industrial Average.
  • The biggest question, do we make new highs?

The chart above is of the S and P 500 breaking out but not to new highs yet.

The chart above... the Trend Wizard Timing Tool is still bullish but ready to crossover, Monday should tell the story. 

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