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Short Term Market Outlook

The Dow Jones 30 Index has fallen 50% from it's rally high of 14,279 and could rebound soon  however it also has broken below it's long term uptrend line from the March lows and fallen below it's 200 day moving average which is psychologically negative for market technicians . If the downtrend continues the next level of support is at the 61.8% Fibonacci retracement level of 12,845.


Short Term Market Outlook

The Nasdag Composite Index is in neutral territory for overbought/oversold indicators. The current Elliott Wave count for 2% impulse waves  is #3. Resistance on the daily chart is at the October 11th  intra-day high of 2,834. If resistance is broken expect a continued  major move up for the index.


Short Term Market Outlook  

The Dow is oversold on the intra-day charts however on the daily charts the Dow has started a short term wave 3 impulse down move. We expect the Dow to have a bounce up day then continue the short term trend down to the Fibonacci 50 % retracement level at  13,400 before possibly resuming the next intermediate move up.




Short Term Market Outlook  

The Dow and other major indices are extended or overbought. Support for the Dow is at it's 20 day simple moving average. With upcoming quarterly earnings season approaching any pullbacks present buying opportunities and chances for volatility plays.




Short Term Market Outlook  

The major indices are extended or overbought. The Dow has broken it's short term uptrend line and near term support is at the lower Bollinger Band  at 12,870. Any test of support is a great buying opportunity.



The Long Option Straddle

A long option straddle is a purchase of a call option and put option on the same security at the same or different strike prices. The  option straddle strategy works best on high volatility securities or during volatile events. We prefer to purchase straddles on stocks the session before the stock's earnings report is released and for futures or commodities we prefer to purchase straddles before key economic or agricultural reports are released.   




Using stops and capital preservation

The primary method we use to enter trades is  price alert stops as confirmation for system signals, on buy signals we use price alerts set at the previous sessions high and on sell signals we use price alerts set at the previous sessions low. After entering positions we preserve our capital by using trailing stops normally set at the previous sessions high or low.
A new cycle begins?
One of the market and fund timing indicator tools we use is a comparison chart of the weekly 30 year bond yield versus the weekly S&P 500. As you can observe from the troughs and peaks in the bond yield when the yield is low and trends down the market tends to rally and when the yield is high and trends up the market stalls or corrects. Now with the Federal Reserve leaning toward a loosening of rates the yield may trend lower and the markets should continue to rally for some time.

Weekly 30 Year Bond Yield ( Interest Rate)

Weekly S&P 500




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