DOW Closing the first week of 2015 below Support!
Technicals
The first red support line has been breached as the DOW managed to close beneath it (Red Circle). As you can see the Stop Loss is just above previous shadows which is only around 70 points compared to a profit margin of around 550 points a good 8:1 ratio in earnings:loss. Also according to the Stochastic s, the bear market triggered once it closed beneath the Overbought zone. In the short term moment, I am likely to see stocks rise to around 17900 before this analysis kicks in.
However, be prudent as you trade because the DOJI bar indicates uncertainty for the moment. As an aggressive trader I am likely to Short the stock on the open, but as a cautious trader I will wait for the Support (Now Resistance) of 17830 to be tested before shorting. Also do not expect to make 550 points within the next few days, there are likely to be short term supports on the way down that can bounce the market in the opposite direction for the time being, so consider tightening your stops as you profit.
To reinforce my analysis, I have setup a Fib Retracement from Oct 2013 to Dec 2014 and have found a convergence at our Profit Take level of around 17270 (The next support below) which is also the 23% Fib Support.
Fundamentals
As the Federal Reserve mentioned, they will not consider changing interest at least until the First Quarter of 2015 (According to Bloomberg, Reuters and CNBC) which is around March time. Now we all know that interest rates will have a major influence in the markets. As an investor I would want to be cautious with these economic alterations by tapering down on my investments.
I believe that this is a likely reason for stocks to draw down its gains in the first quarter of 2015 as opposed to the market being overvalued in the monthly and weekly for sometime now.
Along with that, if you start taking a good look at crude oil, you'll see that it has closed ABOVE its 15 year weekly trend line along with divergences indicating a reversal in the crude oil bear market. Also I have heard on many occasions that big institutional investors are getting ready to buy Cheap Oil. As we can see with the DOJI candle (Circled) there is uncertainty in the markets, perhaps because of the oil trend. The US needs Oil prices to be around $90 to remain profitable which is still quite low compared to other countries around the world needing around an unrealistic $170 to remain profitable.
However, most companies who are benefiting from cheap oil prices are going to start feeling the heat when oil prices are back on the rise. Companies who use energy or heat (Pretty much most of them) are likely to enter a correction phase to adjust to rising oil prices. Which in turn will affect its local index.
Happy Trading and I wish you all the best for 2015.
The first red support line has been breached as the DOW managed to close beneath it (Red Circle). As you can see the Stop Loss is just above previous shadows which is only around 70 points compared to a profit margin of around 550 points a good 8:1 ratio in earnings:loss. Also according to the Stochastic s, the bear market triggered once it closed beneath the Overbought zone. In the short term moment, I am likely to see stocks rise to around 17900 before this analysis kicks in.
However, be prudent as you trade because the DOJI bar indicates uncertainty for the moment. As an aggressive trader I am likely to Short the stock on the open, but as a cautious trader I will wait for the Support (Now Resistance) of 17830 to be tested before shorting. Also do not expect to make 550 points within the next few days, there are likely to be short term supports on the way down that can bounce the market in the opposite direction for the time being, so consider tightening your stops as you profit.
To reinforce my analysis, I have setup a Fib Retracement from Oct 2013 to Dec 2014 and have found a convergence at our Profit Take level of around 17270 (The next support below) which is also the 23% Fib Support.
Fundamentals
As the Federal Reserve mentioned, they will not consider changing interest at least until the First Quarter of 2015 (According to Bloomberg, Reuters and CNBC) which is around March time. Now we all know that interest rates will have a major influence in the markets. As an investor I would want to be cautious with these economic alterations by tapering down on my investments.
I believe that this is a likely reason for stocks to draw down its gains in the first quarter of 2015 as opposed to the market being overvalued in the monthly and weekly for sometime now.
Along with that, if you start taking a good look at crude oil, you'll see that it has closed ABOVE its 15 year weekly trend line along with divergences indicating a reversal in the crude oil bear market. Also I have heard on many occasions that big institutional investors are getting ready to buy Cheap Oil. As we can see with the DOJI candle (Circled) there is uncertainty in the markets, perhaps because of the oil trend. The US needs Oil prices to be around $90 to remain profitable which is still quite low compared to other countries around the world needing around an unrealistic $170 to remain profitable.
However, most companies who are benefiting from cheap oil prices are going to start feeling the heat when oil prices are back on the rise. Companies who use energy or heat (Pretty much most of them) are likely to enter a correction phase to adjust to rising oil prices. Which in turn will affect its local index.
Happy Trading and I wish you all the best for 2015.
Pernyataan Penyangkalan
Informasi dan publikasi tidak dimaksudkan untuk menjadi, dan bukan merupakan saran keuangan, investasi, perdagangan, atau rekomendasi lainnya yang diberikan atau didukung oleh TradingView. Baca selengkapnya di Persyaratan Penggunaan.