Earnings season is in full swing and the KEY EARNINGS LEVEL for the DJIA is still being assembled, but it is falling as I calculate it because of stocks like XOM, UTX, MMM and others are trading down lower than when they reported back in April.
Look at the trend of the % of stocks above their respective 50 day moving averages, which is the MMFI Index at the bottom. During each rally phase the market has had fewer and fewer stocks participating. Note the red line is declining for each peak since February. Generally this is not a good sign.
Usually the 200 day moving average is a level that many people watch and long term investors like to add to positions at this level, but it is not a guarantee that the market will hold it, since there are no guarantees in trading or investing.
Coming into Friday's opening, the KEY EARNINGS LEVEL of the DJIA is at 18050 and I will update it over the weekend.
The last rally is basically completely retraced here and there will likely be some carryover selling into Monday as foreign markets will react to our poor activity on Friday and trade down on Monday, setting a weak tone for the opening.
If Hillary Clinton's views on changes in capital gains tax rates takes center stage, then investors will be taking money off the table and could create a short term, dramatic decline in the market like we saw in 1987 where a 40% hike in the Capital Gains tax rates the following year in 1988 (from 20% to 28%) led to a 40% drop in stock prices in the same year. Unfortunately, Hillary is looking for a hike from 15% to 40%, more than 150% increase in 1 year holding period capital gains tax rates. Let's see how the weekend press handles this.
I put a sell @ the mid point of Friday's range as an entry level - with a stop over the YE2014 level marked in green. Targeting a drop equal to the high before the 200 day moving average, swinging down by the same amount as stop loss orders trigger a quick decline.
Tim
Look at the trend of the % of stocks above their respective 50 day moving averages, which is the MMFI Index at the bottom. During each rally phase the market has had fewer and fewer stocks participating. Note the red line is declining for each peak since February. Generally this is not a good sign.
Usually the 200 day moving average is a level that many people watch and long term investors like to add to positions at this level, but it is not a guarantee that the market will hold it, since there are no guarantees in trading or investing.
Coming into Friday's opening, the KEY EARNINGS LEVEL of the DJIA is at 18050 and I will update it over the weekend.
The last rally is basically completely retraced here and there will likely be some carryover selling into Monday as foreign markets will react to our poor activity on Friday and trade down on Monday, setting a weak tone for the opening.
If Hillary Clinton's views on changes in capital gains tax rates takes center stage, then investors will be taking money off the table and could create a short term, dramatic decline in the market like we saw in 1987 where a 40% hike in the Capital Gains tax rates the following year in 1988 (from 20% to 28%) led to a 40% drop in stock prices in the same year. Unfortunately, Hillary is looking for a hike from 15% to 40%, more than 150% increase in 1 year holding period capital gains tax rates. Let's see how the weekend press handles this.
I put a sell @ the mid point of Friday's range as an entry level - with a stop over the YE2014 level marked in green. Targeting a drop equal to the high before the 200 day moving average, swinging down by the same amount as stop loss orders trigger a quick decline.
Tim
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