Joined: 27 Jun 2004
Location: Houston, Texas
|Posted: Wed Nov 10, 2004 12:33 pm Post subject: Stock market outlook
|Stock market outlook, candlestick's provide a clear picture
Now we are past the elections worries. Where will the markets go from here? Greenspan is expected to raise interest rates. Oil prices appear to be weakening. Tuesday, the oil futures broke down through the 50 day moving average with strength, indicating that it might go down the $40 per barrel. Earnings for most companies appear to be decent to strong. The war in Iraq seems to be taking a backseat in the news media. So what does all this do for the stock market outlook?
The NASDAQ has been forming some doji's after a gap up over the last few days. Doji's at the top, stochastics in the overbought area, represent indecision. The Dow also has formed a couple doji's in the last couple days. However, there has not been any selling yet to confirm a reversal.
As seen in our morning comments, it is still recommended to continue to hold the stocks that have good charts until we see a severe sell signal.
Another telling indicator during this market uptrend is that specific sectors are working very well while others are pulling back. This provides a profit-taking process during the uptrend. Witnessing sector rotation reveals that money is not coming out of the market, it is just be replaced to stronger sectors. The candlestick signals provide a clear visual graphic of which sectors are being bought and which are being sold. The oil and gas drilling sector is now bouncing up off the 50 day moving average with a Morning Star signal today. This information provides a place to put funds with a high probability upside potential and low downside risk.
When putting all this information together, and viewing the candlestick signals, the stock market outlook is still positive until there are signs of selling across-the-board.