Dow Jones: down… but just a little bit

[the-marketfighter]

With the closing on Friday at 9093.24 points we can define two scenarios:

Bear market rally. Since 3/9, we are experiencing a bear market rally in a continuing down trend in the long run. In according to this hypothesis, analyzing the previous bear market rallies, we can define a forecast trajectory like the one shown with blue stretch. In these terms then we may expect a return at 8800 points by next week. After that it might expect a return to the 8900, but the possible trend should be confirmed.

Up trend. On 3/9 the new long-term trend is started up. If so, the analysis of previous up trends leads us to conclude that the most likely path would be the one marked with green stretch. Under this scenario, we may expect a return in 8900 area by the end of the next week, but only to prepare a subsequent new growth to 9250 by mid-August. This expectation should of course be updated.

I still think this second option (new up trend already in place) as the most likely.

The MarketFighter
(www.marketfighter.com)

 

[demeanor]

On Wednesday, plunging Chinese shares and commodities stoked speculation that the surge in equities has outpaced the economy, this made the US stocks end up lower.

Liam Dalton, who is New York-based chief executive officer of Axiom Capital Management said: "China has been the epicenter for marginal growth in the global economy, so weakness there would take the edge off sentiment around the world. This has not been a very high- quality rally. Money has been chased into the market, so a setback would be normal.”

I think US stocks are going down.