chart courtesy of www.stockcharts.com
The past few weeks have proved quite a roller coaster ride for traders and investors alike. We have seen several hundred point swings intraday. This volatility has offered numerous day trading opportunities. Markets do not like uncertainty and the recent Fed decision not to raise interest rates has not helped. Pundits continue to speculate what the Fed's next move will be. All of this is just speculation of course. What is certain is that the Fed would have worsened the problem if they raised rates. A so-called "hard landing" would have been virtually guaranteed. The global economies ARE connected and we simply cannot choose to ignore them when they continue to weaken.
If the recent global data continues unchanged we can expect to see more selling pressure. The Chinese data is awful. They are no longer able to present a rosy picture of their own economy. The smoke and mirrors are broken. Market forces are taking effect. This is as it should be.
The Dow will most certainly test its 15380 level over the next few weeks. All of the technical charts are pointing to a move lower as the market backs and fills. If the retest holds we will have an intermediate bottom similar to 2011. While weakness abounds it does not mean the end of the world! In fact we will continue to have great buying opportunities in energy, commodities, and manufacturing. Many of the old line manufacturing companies still have strong cash flow and they are paying 2-3% dividends.
Note: The above is for informational purposes only. Any decision to buy, sell, or hold a specific investment for a portfolio should be reviewed by your investment adviser.
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