One way or another, virtually everyone has money tied up in the stock market. Maybe you trade stocks or options all the time, maybe you invest every now and again, or maybe you put money into a mutual fund.
Either way, your money is trending one way, and you need to know where it’s headed in 2016…
If you’re also a member of WallStreetInformer.com, you probably have a decent idea of how I feel about the stock market these days.
I study the market every single day.
But admittedly, that can be a bad thing sometimes. It can be like putting together a jigsaw puzzle…
You can easily become so focused on a particular section of the puzzle that you end up missing the bigger picture. That’s why it’s imperative to take a step back every so often and look at the puzzle as a whole.
The same holds true on Wall Street.
And when I recently took a look at the big picture for the market, all I had to do was use some common sense to see that it’s becoming more and more unhealthy right now. That could mean your money is headed straight down in 2016…
And here are a few of my reasons why:
1. No new high
A common theme of any bull market is the ability to reach new highs time and time again. Well, this market hasn’t hit a new high since July!
And after that huge August drop off, the current market really should have been able to rally past that July high if it were to continue it’s bullish trend. It hasn’t, and that’s not healthy.
2. So many shorts
A short sell is basically the opposite of a buy trade – you short something when you expect it to fall. Part of my job is combing through hundreds of stocks each day, and I’ve found something interesting lately.
There are far more good-looking shorts than good-looking buy trades these days. That’s another unhealthy sign.
3. Can’t keep its head above water
On Wall Street, a very important tool is the moving average, which is the line that shows the average price of any index or stock over a particular number of days. And a good indicator is the 200-day moving average.
A healthy bull market will stay above that 200-day moving average because it’s climbing.
The strong market in 2014 only dipped below that average ONCE. In 2015, it’s fallen below the 200-day moving average several times, and it’s currently below it!
And the last thing that truly exemplifies the direction this market is headed is just using common sense when you look at the market right now. It hasn’t just slowed down – it’s keeling over.
And if the benchmark S&P 500 index closes significantly below the 2,000 mark, it could be game over for the former bull market…