Daily Stock Market Update – 08/24/11 © ™

************************************************************************************

  • Short Term
  • July 2011 To Present
  • Step 3 Down – Finished
  • Step 1 Up Is Underway
  • Current Action Status – Formal Buy Signal On August 23

The DJ Industrials closed up 137 points today, very near the high of the day.  But it was a ragged advance, up in the morning, down most of the day and then rising into the close.  Since the market is still moving away from the bottom things appear to be OK.   I think many professional investors are waiting to see what Bernanke will say on Friday (7 AM EDT) and that’s why we haven’t made a strong breakaway move to the upside.

Scenarios that the market could follow on Friday.

  • Wall St. likes Bernanke’s speech – A strong rally (good news for us)
  • Wall St. dislikes Bernanke’s speech – A decline that continues constantly throughout the day will not be a good sign.
  • Wall St. dislikes Bernanke’s speech – A sharp drop followed by a recovery for most of the day could be indications that a valid bottom is in place (still good news for us)

The two charts below are identical and show the last several days of the SP 500 futures.  Since the wave count is difficult to interpret, we will look at the channels.  Each chart has a different version of the upward channel in effect.  One channel is much narrower than the other and narrow channels don’t hold up through time.  Regardless I would think on Friday the channel will be revised due to market volatility.

08-24-11 SP500 FUTURES 10 MINUTE BARS

08-24-11 SP500 FUTURES 10 MINUTE BARS-2

Gold has been hammered hard the last two days.  It was down $104 today and down about $50 yesterday.   That interestingly corresponds with the market taking off to the upside.  It appears that investors are selling gold and moving into stocks.  Since gold is a safe haven, some investors have lost their fear of dollar devaluation.  Correspondingly the dollar has moved up smartly the last two days.  Bonds have been moving lower in price (higher yield) since August 18 and that often happens with a stronger dollar.   August 18 was just prior to the second bottom in the stock market.  During QE2 bond prices moved lower and now bonds are moving lower prior to Friday’s FED speech.  That may bode well for a positive announcement on Friday.  Obviously we will wait until 7 AM Friday for the final prognosis.

08-24-11 GOLD ETF 20 MINUTE BARS

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