Hello my Investors, Traders and Reader Friends. In recent days I've received many communications from Stock Tips Invest readers. Most of them are related to the market situation.
I have the impression that many people want to enter the market, but think it may be a little late. Also, I think there are others that have been taking long positions and are afraid that there will be a correction. That is, there is the fear of losing all the gains.
Until a couple of weeks, the market seemed overbought. The situation in Europe became more uncertain. In the Middle East had a lot of fire. And finally, some news about Asia(mainly China) were not very good. The conditions for a correction were clear. But as usual, the market takes the opposite tack ... and continued to rise.
Now the market is also overbought. Everything has calmed down in Europe. Increases in U.S. employment and the economy shows signs of life. In the Middle East as usual. And in China, the government has taken a number of measures in order to boost economic growth. So now the market ... that will do?. We never try to guess the direction to take the market. Our system as a semaphore. If you are in red .. stop. The difference is that in this traffic light, do not know how long will each sign. Nor will we know if after amber, red or green is ... again. So it's best to act according to the signs. Do not get ahead and assume (guess) what will come later.
In the following chart, you will be able to see two important indicators (Stochastic and RSI) that attempt to measure the degree of oversold or overbought is the market.
Two important conclusions can be seen from this chart. The first is that according to the Stochastic indicator, the market is overbought, but according to RSI, there is still room to rise further before reaching this condition. The second is that Stochastic overbought may remain for several months before initiating a correction. In the following chart, we will present an indicator that tries to show the trend of the market. This indicator is well known (and used) by the traders and called MACD.
As can be seen clearly, the market is showing an upward trend. The next level ofresistance is around 13,133 points, and corresponds to May 2008. But this is a relatively minor resistance. The most important level of resistance is around 14,095 points reachedin October 2007. The indicators show a healthy upward trend. Correction is possible? Of course, but for now this would be only too small to allow the market to continue rising.Finally, I point to a further aspect. There is currently a high level of liquidity in the market. 10 years Treasury Bonds have a yield of just 2%. If the stock market continues to givepositive signals, will be able to attract some of that liquidity, strengthening even more its trend.
I have the impression that many people want to enter the market, but think it may be a little late. Also, I think there are others that have been taking long positions and are afraid that there will be a correction. That is, there is the fear of losing all the gains.
Until a couple of weeks, the market seemed overbought. The situation in Europe became more uncertain. In the Middle East had a lot of fire. And finally, some news about Asia(mainly China) were not very good. The conditions for a correction were clear. But as usual, the market takes the opposite tack ... and continued to rise.
Now the market is also overbought. Everything has calmed down in Europe. Increases in U.S. employment and the economy shows signs of life. In the Middle East as usual. And in China, the government has taken a number of measures in order to boost economic growth. So now the market ... that will do?. We never try to guess the direction to take the market. Our system as a semaphore. If you are in red .. stop. The difference is that in this traffic light, do not know how long will each sign. Nor will we know if after amber, red or green is ... again. So it's best to act according to the signs. Do not get ahead and assume (guess) what will come later.
In the following chart, you will be able to see two important indicators (Stochastic and RSI) that attempt to measure the degree of oversold or overbought is the market.
Two important conclusions can be seen from this chart. The first is that according to the Stochastic indicator, the market is overbought, but according to RSI, there is still room to rise further before reaching this condition. The second is that Stochastic overbought may remain for several months before initiating a correction. In the following chart, we will present an indicator that tries to show the trend of the market. This indicator is well known (and used) by the traders and called MACD.
As can be seen clearly, the market is showing an upward trend. The next level ofresistance is around 13,133 points, and corresponds to May 2008. But this is a relatively minor resistance. The most important level of resistance is around 14,095 points reachedin October 2007. The indicators show a healthy upward trend. Correction is possible? Of course, but for now this would be only too small to allow the market to continue rising.Finally, I point to a further aspect. There is currently a high level of liquidity in the market. 10 years Treasury Bonds have a yield of just 2%. If the stock market continues to givepositive signals, will be able to attract some of that liquidity, strengthening even more its trend.
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