Tuesday, July 1, 2015
Dow Heads To The Downside: It's Not Greece, Puerto Rico, or China
The last several days have been full of the news of general stock market price woes, and after a supportive FRB FOMC interest rate posture in mid-June, debt problems in Greece and in Puerot Rico seem to be high on the headline blame list. On Monday the Dow 30 Industrial Composite Index dropped nearly 350 points. Tuesday's end quarter market action saw early morning recovery gains erased with the Dow trading below yesterday's lows. We find headlines highlighting a break in the 200-day moving average, and one of the largest advantages in volatility in history ascribed to yesterday's trading. And others are pointing to problems in China, as the central bank there attempts to further loosen monetary policy to slow a sharp decline in Chinese stock valuation, as being even more important than the debt situation in Greece.
However, the premise that Greece debt and Greece's subsequent potential for leaving the eurozone, and Puerto Rico's now very apparent debt-servicing problems, and China's hard falling stock valuations, may be the primary causes of the Dow's woes and the sell -off early this week may be seriously misplaced. And Investors and traders may want to look a little deeper before trading on such a premise.
Many analysts have been calling for the possibility of a general stock market correction to start this summer season. I'm one of them. Last month's earnings announcements were on balance not particularly strong, neither were many forward outlooks. Employment in the U.S. also still remains a dicey issue throughout the economy, despite recent improvements. And last week's Thursday and Friday trading following Wednesday's positive FOMC "no rate hike" news did little to offset the Dow's downward trajectory which started earlier in the week before the announcements. Historical seasonal volatility associated with June, July, and August are here. And technicals are showing this.
It is my observation that the market is in fact performing in a manner and toward price levels consistent with my forecast earlier in June well before this past month's FOMC meeting. This week's prices are running right along key quarterly echovector slopes established at key time-points during last week following mid-June's important FRB FOMC prime interest rate announcement.
This can be seen in THIS WEEKS ECHOVECTOR ANALYSIS FOCUS FORECAST FRAMECHART UPDATES.
So be sure to have employed active advanced position management OTAPS-PPS triggers to insure gains in the event of a coming correction, and to capture additional gains in the event of a possible bounce!
SEE SPY ETF AND SPX COMPOSITE INDEX ECHOVECTOR ANALYSIS FOCUS FORECAST FRAMECHART PERSPECTIVES RELEASED THIS PAST MONTH...