Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
Stock Market Brief in Count Down to US Election Result 2024 - 3rd Nov 24
Gold Stocks’ Winter Rally 2024 - 3rd Nov 24
Why Countdown to U.S. Recession is Underway - 3rd Nov 24
Stock Market Trend Forecast to Jan 2025 - 2nd Nov 24
President Donald PUMP Forecast to Win US Presidential Election 2024 - 1st Nov 24
At These Levels, Buying Silver Is Like Getting It At $5 In 2003 - 28th Oct 24
Nvidia Numero Uno Selling Shovels in the AI Gold Rush - 28th Oct 24
The Future of Online Casinos - 28th Oct 24
Panic in the Air As Stock Market Correction Delivers Deep Opps in AI Tech Stocks - 27th Oct 24
Stocks, Bitcoin, Crypto's Counting Down to President Donald Pump! - 27th Oct 24
UK Budget 2024 - What to do Before 30th Oct - Pensions and ISA's - 27th Oct 24
7 Days of Crypto Opportunities Starts NOW - 27th Oct 24
The Power Law in Venture Capital: How Visionary Investors Like Yuri Milner Have Shaped the Future - 27th Oct 24
This Points To Significantly Higher Silver Prices - 27th Oct 24
US House Prices Trend Forecast 2024 to 2026 - 11th Oct 24
US Housing Market Analysis - Immigration Drives House Prices Higher - 30th Sep 24
Stock Market October Correction - 30th Sep 24
The Folly of Tariffs and Trade Wars - 30th Sep 24
Gold: 5 principles to help you stay ahead of price turns - 30th Sep 24
The Everything Rally will Spark multi year Bull Market - 30th Sep 24
US FIXED MORTGAGES LIMITING SUPPLY - 23rd Sep 24
US Housing Market Free Equity - 23rd Sep 24
US Rate Cut FOMO In Stock Market Correction Window - 22nd Sep 24
US State Demographics - 22nd Sep 24
Gold and Silver Shine as the Fed Cuts Rates: What’s Next? - 22nd Sep 24
Stock Market Sentiment Speaks:Nothing Can Topple This Market - 22nd Sep 24
US Population Growth Rate - 17th Sep 24
Are Stocks Overheating? - 17th Sep 24
Sentiment Speaks: Silver Is At A Major Turning Point - 17th Sep 24
If The Stock Market Turn Quickly, How Bad Can Things Get? - 17th Sep 24
IMMIGRATION DRIVES HOUSE PRICES HIGHER - 12th Sep 24
Global Debt Bubble - 12th Sep 24
Gold’s Outlook CPI Data - 12th Sep 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

We are at a Critical Juncture for Stocks and Bonds

Stock-Markets / Financial Markets 2011 Nov 23, 2011 - 07:34 AM GMT

By: Money_Morning

Stock-Markets

"Can I be honest with you?"

I hate it when people ask me that. As if I’m going to respond, “No, lie to me.”

But the truth is, it’s usually a preface that suggests we’re not going to want to hear what we’re about to be told.


So... can I be honest with you?

I have no idea what’s going to happen in stock markets or bond markets this week.

We are at a critical juncture for both stocks and bonds, and this week might be huge.

This past week was ugly, as in really ugly. But, as ugly as it was, U.S. equities are hanging on (by a thread) to their upward bias. As far as the rest of the world, it’s pretty much the same; however, there are cracks everywhere.

From a technical perspective, we are in a very dangerous position. If we don’t see a good rally early in the week, we might be in trouble. If we see a hard sell-off before Thursday, we could be on our way to testing this year’s lows, or breaking them.

Sorry, but I feel I have to digress here for a moment. This is for all of you who just sighed when you read the word “technical” and thought “technical analysis, that’s like reading tea leaves.” Can I be honest? If you think that, you are an idiot. Sorry, just being honest.

Technical analysis is not a matter of random hash marks on a graph accompanied by lines with circles and arrows. Where do you think those marks on that graph came from?

Technical analysis is all about psychology. It’s a reflection of investor activity and the mindset that accompanies it.

The marks on a bar graph reflect the high and low prices of that day. There can also be little marks on each vertical line that show the opening price and the closing price, too. When you string a lot of daily prices together on a graph, it is exactly what happened when investors and traders (we’re all traders now, I’m just appeasing you out there who don’t know it, or are fighting it) bought and sold whatever instrument you’re looking at.

What you may not realize is that things like “support” and “resistance” (to name the most often cited technical analysis tools, though there are many other excellent ones) are places where traders made actual decisions with their money.

A support line, for example, reflects where a stock, an index, a commodity (it doesn’t matter) experienced buying interest. The instrument was going down and stopped declining, because buyers stepped in, and selling abated. A resistance line would reflect the opposite.

That means that people actually took a position at that juncture.

In the case of support, buyers stepped in and maybe short sellers stepped to the sidelines. Then the instrument rises in price. Maybe it comes back to that support level a few times (the more times an instrument touches its support or resistance levels, the more important those levels become) and each time buyers again step in the instrument goes higher, again.

If you think that technical analysis is mumbo-jumbo, think again.

Source :http://moneymorning.com/2011/11/23/can-i-be-honest-with-you/

Money Morning/The Money Map Report

©2011 Monument Street Publishing. All Rights Reserved. Protected by copyright laws of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), of content from this website, in whole or in part, is strictly prohibited without the express written permission of Monument Street Publishing. 105 West Monument Street, Baltimore MD 21201, Email: customerservice@moneymorning.com

Disclaimer: Nothing published by Money Morning should be considered personalized investment advice. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized investent advice. We expressly forbid our writers from having a financial interest in any security recommended to our readers. All of our employees and agents must wait 24 hours after on-line publication, or after the mailing of printed-only publication prior to following an initial recommendation. Any investments recommended by Money Morning should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company.

Money Morning Archive

© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in