"Stock market bubbles don't grow out of thin air. They have a solid basis in reality, but reality as distorted by a misconception."
- George Soros
Fortunately for Tradingmarketsignals.com and its members the 10700 was marked out as a high days before it even printed whilst everyone else buoyancy led them to believe 11000 was on the cards.
We preferred talking about 10000 at the time and throughout this sideways year TMS has opposed the directions of the crowds and looked the other way! In corroboration with our reports the markets have gone onto print our projections nicely.
Once again we're hearing a lot of crash talk. We are viewing the markets in bearish fashion in the overall context of things but this one sided behaviour of crash talk is almost like herd mentality in which we believe the market could well be supported in continuation of its range trading year so far.
So why is this year a range trading (sideways) year so far?
The Dow Jones has moved in around a 1500 point range this year. Every top and bottom has been practically followed on with marginal a few hundred points hit and miss from previous tops and bottoms, especially over the last four months.
Currently the Dow Jones is a few hundred points from the open of 2010 in which case the market has pretty much done nothing this year so far.
However the crash talk has escalated more so every time a marginal new low has been made in which case the market then stages a rally! When the expectation is lopsided the market continues to oppose the crowd's belief, either by doing the exact opposite or by simply having a sideways year.
So last week took us to 10000 again! Are we ready for another rally so that we can actually see the market move closer to 11,000 rather than the current 10000?
The chart below is a Four Hour Dow Jones Chart
The light blue lines show the markets breakout created by Friday's rally. However on the other hand the red downward parallel channel suggests the rally/bounce is pretty much now halted. In addition to this the orange intersecting line also suggests the market upside is now pausing.
At Tradingmarketsignals.com our TMS system will move with the markets moves whichever way this may be. However we would favour upside and do feel that the market can stage an advance here which could take us back to 10500. This will hinge on if the market can hold 10100 nicely. Continued closes above this level should prompt upside whilst the crowds expect downside.
My name is Ajit Singh and my work with the financial markets started from the young age of 17. We are www.tradingmarketsignals.com and so far in August our TMS system has gained 886 points (Closed signals) from five major markets: Dow Jones, Euro, Sterling, FTSE100 & Crude Oil in addition to which some gaining signals are still open with more triggers taking place this week!
Please note our annual membership offer ends on the 1st of September after which the membership price will increase. Our main focus is becoming the institutional side as over the past few months TMS is becoming a harbor for institutional investors.