Courtesy of Read the Ticker
Like 1929 the markets have bounced. This time it is on the back of the FED $6.5T money printing.
Previous Post: Dow 2020 Crash Watch
But can the FED blow $6T every time the market rolls down to test support.
Yes, maybe before the US 2020 elections the FED will do ‘what it takes’. But post elections not so much, the year 2021 is a long way from the next election (presidential or congress) and defense of the markets may not be so supportive at $6T or $10T per market smash. The FED may hesitate, and that will be window for stocks to break lower.
The 36 month simple moving average (SMA) is a good indicator of the Dow Jones trend (36 months is three years). It has been a good indicator of Dow break outs over the last 100 years.
Now, if you take the difference between the Dow monthly close and the 36 month simple moving average and convert it into a percentage change this is known as the ‘Detrending Price Oscillator’ or DPO. The DPO highlights how well a moving average performs, it also highlights momentum towards or away from the moving average.
Lets review the SMA(36) and DPO(36) during similar market changes: 1929, 1974, 1987, 2000, 2007.
Chart 1929.
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Chart 1974
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Chart 1987
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Chart Now
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The concern is that this is on the table for 2021
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Stay frosty, the next 6 months will forge trends for the next few years.
Changes in the world is the source of all market moves, to catch and ride the change we believe a combination
of Gann Angles,
Cycles,
Wyckoff and
Ney logic
is the best way to ride the change, after all these methods have been used successfully for 70+ years.
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NOTE: readtheticker.com does allow users to load objects and text on charts, however some annotations are by a free third party image tool named Paint.net
Investing Quote…
..”Frequent requests are made for the name of someone who will teach the Art of Tape Reading. I do not know of anyone able to read the tape with profit who is willing to become an instructor. The reason is very simple. Profits from the tape far exceed anything that might be earned by charging tuition fees to his students. Its simple economics”…
Richard D Wyckoff
..The time of maximum pessimism is the best time to buy and the time of maximum optimism is the best time to sell”..
John Templeton
…..“I measure what’s going on, and I adapt to it. I try to get my ego out of the way. The market is smarter than I am so I bend.”..
Martin Zweig
Unless you can watch your stock holding decline by 50 per cent without becoming panic stricken, you should not be in the stock market.
Warren Buffett
..“Don’t try to buy at the bottom and sell at the top. It can’t be done except by liars.”..
Bernard Baruch
