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Jan 30, 2007
-- Over the past approx. 6 months, the major US stocks
markets have basically defied gravity... in a very unusual
pattern, they DOW, Nasdaq, and S&P have all
simultaneously been able to maintain a level above their
50 Day Moving Averages for
approx. the past 6 consecutive months (see charts below)... the
duration of this pattern/trend being exhibited by all 3
simultaneously is unusual and doesn't happen very often...
for all 3 major indexes to maintain above their 50 Day Moving
Averages for approx. 6 consecutive months has only happened
several times during the past several decades.
For those not familiar with Technical
Analysis on stocks... stocks and the stock market indexes
generally follow a much more regular trading pattern that
swings above & below the 50 Day Moving
Average Trend-line with a frequency more typically
around every 1 - 2 months... the 50 Day Moving Average
trend-line can be seen in the chats below as the curvy "red
line".
I've added green and red arrows to the charts
below, to make the trend even easier to see... you can clearly
see from the graphs below that for approx. the past 6 months,
the DOW, S&P, and Nasdaq have all simultaneously trended
above their 50 Day Moving Average Trend-line
(however, the Nasdaq has recently started trending lower to
around it's 50 Day Moving Average). I've also added a slightly
longer-term longer chart of the DOW that shows the past 28
months of trading, where one can see the normal trend pattern
prior to the last 6 months.
Given the trading pattern of the 50 Day
Moving Averages over the approx. past 6 consecutive months, the
odds of the 3 major U.S. stock market indexes starting to trend
downwards to at least their 50 Day Moving Averages increases
daily... in fact, the Nasdaq already started the process approx.
1 month ago, and the DOW and S&P are starting to show signs they
may move to their 50 DMA's soon.
If history is to be a guide... a downward
move in the major U.S. Stock indexes over approx. the next 30 to
120 days towards a test of recent support levels below the 50
D.M.A. would be considered normal... however, because of the
recent extended rally, a total downside move of 5% to 10% in the
major U.S. Stock Market Indexes wouldn't surprise me.
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