DJI and TRANS both have closes below August Low
In Dow Theory, the confirmation of the TRANS low earlier was given yesterday by the DJI yielding a primary bear market trend. There was no confirmation by either the S&P 500 nor the Wilshire 5000. This gives a lot of questions about the direction of the general market. What does this mean? It means that we will have to wait and see what happens.
The volume was low yesterday as many traders were off for travel or shopping to get ready to celebrate Thanksgiving today. This raises another question about the validity of the Dow Theory confirmation yesterday.
This means that we must use extreme caution regarding investments. Several advisers closely follow Dow Theory and recommend their subscribers do the same. Thus, we are likely to see some selling across the board in reaction to the Dow confirmation. This is also the time of tax selling when many investors will be dumping losses to reduce their capital gain taxes. By the way, it is a generally a good idea to prune the dogs out of your portfolio for tax purposes.
Once again, it is wise to use trailing stops on the stocks you plan to keep. These will protect some of the profit or prevent extreme losses. This is an once of protection which costs nothing.
Since there was a significant drop of the DJI for the week and 200+ on Wednesday, we could see an upward jump on Friday or next week. Friday is very likely to be another very light volume day with folks still enjoying the Thanksgiving holiday or shopping until they drop the day after. That could provide for lightening of our market portfolio. Historically, December has been a good month for the stock market. However, we are in somewhat uncharted market waters these days. As mentioned, above, questions remain to be answered.
Only our Sovereign God knows the future completely and He is working all things for His glory and for the ultimate benefit of His people. If you are one of His, you can rest in the assurance of His promises. How often, He has shown His mercy and grace to His people. We must always rejoice in Him and thank Him for all. Live a life of gratitude to the Creator and Sustainer of all, even Jesus Christ, the Lord.
Best to each, Doug
The volume was low yesterday as many traders were off for travel or shopping to get ready to celebrate Thanksgiving today. This raises another question about the validity of the Dow Theory confirmation yesterday.
This means that we must use extreme caution regarding investments. Several advisers closely follow Dow Theory and recommend their subscribers do the same. Thus, we are likely to see some selling across the board in reaction to the Dow confirmation. This is also the time of tax selling when many investors will be dumping losses to reduce their capital gain taxes. By the way, it is a generally a good idea to prune the dogs out of your portfolio for tax purposes.
Once again, it is wise to use trailing stops on the stocks you plan to keep. These will protect some of the profit or prevent extreme losses. This is an once of protection which costs nothing.
Since there was a significant drop of the DJI for the week and 200+ on Wednesday, we could see an upward jump on Friday or next week. Friday is very likely to be another very light volume day with folks still enjoying the Thanksgiving holiday or shopping until they drop the day after. That could provide for lightening of our market portfolio. Historically, December has been a good month for the stock market. However, we are in somewhat uncharted market waters these days. As mentioned, above, questions remain to be answered.
Only our Sovereign God knows the future completely and He is working all things for His glory and for the ultimate benefit of His people. If you are one of His, you can rest in the assurance of His promises. How often, He has shown His mercy and grace to His people. We must always rejoice in Him and thank Him for all. Live a life of gratitude to the Creator and Sustainer of all, even Jesus Christ, the Lord.
Best to each, Doug
posted by Doug @ 9:49 AM
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