FLASH: Upside Resolution

I am writing a special FLASH Marketdoc Report tonight to illustrate that our Bullish Descending Wedge Pattern has officially resolved to the upside. Is it possible for us to test the bottom again? Sure. However, I expect the pattern to continue to about a 40% retracement. This would place the Dow somewhere around 9000 before we see a significant change in pattern. Take a look at my previous posts and you too can learn how to recognize this important technical pattern! Keep posted to this blog for further updates and market information.

Note: The above report is for information purposes only. For specific decisions to buy, sell, or hold positions in any specific portfolio you must first consult your personal financial advisor.

Market Pattern Continues

For the past few weeks I have illustrated a pattern in the Dow Jones Industrial Average which I believe is a Bullish Descending Wedge formation. As expected the Dow rallied strongly off its low in the 6400 range to over 7500. Over 1100 points, when almost everyone said it would collapse. Strong rallies such as this are typical of rallies during a bear market. These are great opportunities to capture profit at a time when others are panicking. As you can see by the chart we are still in what I believe is the Descending Wedge formation. I expect this pattern to resolve to the upside. There are many reasons for this, mainly because almost no one expects a large upside move, but also because we are seeing signs that economic data is improving in real estate, retail sales, dry goods, etc. Also, from a subjective standpoint, and from following the market for years, "the market just doesn't crash in the Spring." (If this were the fall season I would tell you differently.) Regardless of the reasons, we are looking at what I believe is the best buying opportunity for stocks in over 15 years. There is always the chance that Washington will do something stupid like nationalize the banks, but (I dare say) even they would not make such a misguided move! The opportunities are there to buy some great name companies at bargain basement prices.

Note: The above information is for information purposes only and is not intended as specific investment advice for any person or portfolio. For decisions to buy, sell, or hold any investment, you must consult your own personal financial advisor.

Can You Say "Business Cycle?"

It seems alot of people have forgotten that there is a predictable business cycle for all of the world's modern economies. The above is a good graphic from Fidelity's website which illustrates which stocks will perform well at different points of the business and economic cycle. Read carefully. Don't listen to those "gurus" who are telling you to "wait for the bottom." Where were they last October? With some good information and common sense you can outperform the herd mentality which right now is in a state of panic.

Note: The above information is not intended as specific investment advice for any particular person or portfolio. For a decision to buy, sell, or hold, you must consult your own financial advisor.

Beware of the Bear Trap!!

Last week I wrote about the possible development of a "Bullish" Descending Wedge pattern in the making for the Dow Jones Industrial Average. Since then, we have seen continued selling and a steepening of the top line on the wedge pattern. This present pattern is currently unsustainable. There is absolutely no good news out there... at least that anyone is reporting on. Furthermore, we have actually seen an increase to the negative volume, but not to the point seen in November. Will the market crash? Maybe, but I don't think so. Everybody is calling for the market to go much lower. Where were these "gurus" last October? I may be wrong, but I think we have the makings of a HUGE bear trap. It is estimated there is about $4 trillion in cash on the sidelines waiting to be put to work. I expect we will see some form of resolution within the next two or three weeks... Stay tuned.

Note: The above comments are not intended as specific investment advice to any particular person or portfolio. For questions regarding a specific investment decision to buy, sell, or hold, please consult your personal financial professional.