The main UK and US market indices have fallen to the level of their individual 30wk moving averages. As we have outlined before, this is a normal event for any market correction and is usually a cause for the index to change direction ( and, in this case, to bounce).
And, indeed, this is exactly what happened last week. So we should relax a little and be content that the worst of the correction is now over and so provide you with a number of ‘hot’ buy prospects. But we cannot! The reason is that there are so many other signals that suggest that the markets possess an inherent weakness. Therefore last week’s slight and shallow recovery could be a natural but very limited bounce right on potential support levels and that the overall weakness may yet come to prevail and take matter the markets lower.
Our analysis does,then, continue to lead us to the view that these markets are ‘an accident that may be about to happen’!
We would like to be wrong (it always feels nicer when the markets go up rather than down because more people are happier) but, really, it will not matter at all once the (new?) trend becomes established as we will be able to call ‘shorts’ just as easily – and probably more profitably – than ‘buys’.
So, we just wish that we could be more definitive but, at this stage, it just in not possible; the support levels have held good for the last couple of weeks and we need to see if this will continue.
Patience has to remain the watchword.
Individual market commentary and illustrative charts are available at http://www.sharehunter.com/news/market-review/
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