Stock Indices in a Knot Worldwide

david paul 150 wideThe stock indices of the world have been trading in a tight “Knot” for the last 5 months. Those of you who understand the Fibonacci method of predicting levels in the market will see that the Dow and the SP500 are sitting on a 1.27 extension of the 2008/9 crash. 1.27 for uninitiated is the square root of the Golden Mean 1.618. Whether you think it’s reading the tea leaves or fact, there is a large percentage of the market that follows these techniques.

The bears are using the level to build short positions and long only funds are simply taking profits here. The headwinds are

The Taper
Chinese slowing
Crimea/Ukraine

The Dow is ranging between 16000 and 16500, and that’s been reflected in the VV Composite of the LSE.

In this period, the stocks that I have chosen based on solid fundamentals and the MIDAS TOUCH have held their own, and some like Next have gained in a poor trading environment. Others that didn’t fulfill the strong momentum characteristics of the MIDAS TOUCH haven’t faired that well.

The fundamentals at Lloyds bank have been rated as excellent by VectorVest for the last year, and yesterday’s results showed that the analysis was spot on. This helped the LSE to give a “Green Light Buy” yesterday whilst the longer term trend remains down with the MTI sitting on 1 exactly.

By the time this is published, the results of the US payrolls will have been published and a positive number can easily get the market into an UP/UP situation by Monday.

We all learn by the day in markets. Out of all the recent activity, I have concluded that good fundamentals and the Midas Touch equals fairly easy money, even in the hardest grinding markets.

David Paul
2nd May 2014

To read more blogs from David Paul and learn more about the VectorVest system click here

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