Posts Tagged ‘DOW’
The market appears to have another bull leg with the DOW and S&P 500 closing higher in seven of the last nine sessions to March 6. The blue chip stocks have been especially strong, with the DOW hitting a record close of 14,296.24 and intraday at 14,320 last Wednesday. The S&P 500 is also approaching its historical high.
With the advance, there are now questions regarding the sustainability, which you can read about in “Why Near-Term Prospects in the Stock Market May Be Limited.”
While the global economy is improving, the catalyst for the upward move in stocks has largely been the easy monetary policy worldwide that has resulted in a low-interest-rate environment and the search for alternative investments other than low-yield bonds.
So while all is fine now, I still sense a correction could be in the works, especially if the S&P 500 stalls.
You need to think about a viable investment strategy as a defensive posture. I firmly believe in having an investment strategy in place and adopting strong risk management to protect your investments.
One investment strategy would be to take some profits off the table, but then you may miss out on a potential stock rally.
A popular investment strategy to protect gains is the use of put options as a defensive hedge against market weakness. This strategy is called a protective hedge.
Under this investment strategy, investors may be somewhat bearish or uncertain and want to protect the current gains against additional downside moves in the stock or the market with the use of index put options.
For those of you not familiar … Read More
The six-day losing streak finally came to an end on Thursday, but I sense that the buying was likely more to do with oversold buying than a change in market sentiment.
The charts continue to show fragility and exhaustion, with the near-term view being bearish on weak Relative Strength (RS). My investment advice is that stocks could move lower in the near term.
All four of the key indices remain below their respective key 50-day moving average (MA)—a bearish sign. Watch for buying support due to an oversold technical condition.
April was a record for stocks. Unfortunately, the same cannot be said for May, which has been characterized by uncertainty and a lean towards the downside.
Since May 2, stocks have closed lower in 11 of the 20 sessions to May 27. And to make matters worse, the buying was normally accompanied by light volume.
It has been a great few weeks for stocks. The major indices have edged higher in nine of the last 11 sessions to April 28. The upward moves to the highest levels since June 2008 are impressive and indicate what appears to be a potential breakout on the price charts after the multiple tops. The DOW and Russell 2000 are up over 10% this year.
Stocks continue to edge higher following the recent breakouts by the DOW and S&P 500, which are at their highest levels since June 2008. The bias continues to be bullish. There is some hesitancy on the charts, but stocks are powering higher. The DOW, NASDAQ, and S&P 500 are all up over five percent this year, with blue-chip stocks leading the pack.
Stocks continue to maintain a positive bias in January, with technology and small-caps leading the charge. The NASDAQ is up over three percent in the first two weeks of January. The small-cap Russell 2000 is up 2.30%, while DOW and S&P 500 are up about 1.33% and 2.07%, respectively, in January.
The first week of 2011 was positive; this could signal additional gains for January and the rest of the year.
The near-term technical picture is bullish on above-average Relative Strength, but you should watch the overbought technical condition. Sentiment continues to be bullish.
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