US Stock Market Set to Test the 200DMA
Updated
Hi everybody,
As everyone knows we have seen some massive volatility in the us stock market in Q4 2018. We had a death cross when the 50DMA plunged through the 200DMA, but if you look back in time this in itself doesn't really mean a whole lot. There have been many death crosses which simply resulted in a correction which then rallied only to turn back into a continuation of the bull market.
Is the bull market over? The answer to that question will be answered very soon here. What I expect is for stocks to rally up to the 200DMA and then we will get our answer. If stocks get rejected by the 200DMA and turn lower, then that will tell us that this bull market has most definitely turned into a bear and I would expect a significant sell off. However, if they rally and push through and break through to the upside of the 200DMA then this was just a correction and I would anticipate a rally using the 200DMA as support.
Best of luck and happy 2019!
As everyone knows we have seen some massive volatility in the us stock market in Q4 2018. We had a death cross when the 50DMA plunged through the 200DMA, but if you look back in time this in itself doesn't really mean a whole lot. There have been many death crosses which simply resulted in a correction which then rallied only to turn back into a continuation of the bull market.
Is the bull market over? The answer to that question will be answered very soon here. What I expect is for stocks to rally up to the 200DMA and then we will get our answer. If stocks get rejected by the 200DMA and turn lower, then that will tell us that this bull market has most definitely turned into a bear and I would expect a significant sell off. However, if they rally and push through and break through to the upside of the 200DMA then this was just a correction and I would anticipate a rally using the 200DMA as support.
Best of luck and happy 2019!
Note
Update: 1/31/19 - Stocks have reached the 200dma as I expected, the Dow is now running into some resistance. THIS IS A VERY IMPORTANT TIME. What happens over the next few days/week will most likely determine whether we resume this bear move down or if we continue on with our bull market. Keep an eye on the indices closes relative to the 200dma.Note
Technically we have broken through the 200dma and are now back in a bull market, but we are hitting horizontal resistance so it will be interesting to see what happens here.
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