If you’re silly enough to listen to all the noise in the mainstream financial media, you’ll often hear them try to link market moves to the news, assumptions in other words. The current jabbering seems to revolve around whether the government will legally counterfeit less money in December or not. Unbelievable. If you take a step back for a second, you’d be forgiven for thinking we’re now all living in an insane asylum…
But there’s a difference between cause and causality. The market just does what it does, nobody can definitively say why. And that’s why the best way to understand what the market is telling us is to listen to the market itself.
That’s only my humble opinion. But it also seems logical, no?
So what’s it saying now?
For the past week or so I’ve been cautioning against a pullback in the markets, and how it might seem disconcerting when it happened. Well, here we are.
Here’s a chart of the Dow Jones. We see the break out of its channel that I commentated on, and what we’ve seen now is a customary pullback to what was its old ‘ceiling’. This is normal and healthy.
In theory, that old ‘ceiling’ will become the new ‘floor’, and hold things in place, at least trade sideways.
So we’re at something of a pivotal point now that will tell us if this is merely a healthy pullback or the start of something deeper. If the markets can at least hold at this level for a while, it will be a good sign. If not, we’ll be monitoring closely for further weakness.
Today should be instructive for the shorter term direction, but longer term, please understand that the trend is decidedly UP.
Meanwhile, we’re using this as an opportunity to find market gems that have pulled back in price and look set to soar higher.
Figuring what the overall market is doing is your first step in any trading you do- you need to keep in synch with it, whether to buy or sell as your driving strategy. And the bottom line at this juncture is: don’t panic, and keep some powder dry. Once this correction is over, things are going higher into 2014.
Best,
Jim.
