Is the Dow Starting to Stall?

The Dow seems to be stalling like it did back in June. This time could be a different end result as we’re right near resistance and a rejection wouldn’t be unreasonable. I wouldn’t be shorting this until the breakdown occurs, as the trend is still up and a violent upside break wouldn’t surprise me either. I’ve been battling an intolerably hot Vancouver summer, and the beach seems like a better place to be as we churn. If you really want to short, pick a weak sector like the metals and daytrade, but be careful holding overnight.

That’s how the markets fool people though. They do nothing, do nothing, and just when everybody becomes frustrated and let’s their guard down….BAM….they make their move (click to enlarge).

Comments

[deflation r...:]

The way we finish going into the close today will determine the direction of the market for the mid term. We are at or near resistance in the DOW, S&P and NASDAQ. The close and even tomorrow are critical for the next 60 days.

Jul 30 10:47 AM

[ksmithdc:]

The dow is up right now.

Jul 30 12:45 PM

[Mad Hedge F...:]

It's got to. I thought PIMCO co-CEO Mohamed El-Erian hit the nail on the head when he said that the July stock market rally was nothing more than a sugar high. Skyrocketing unemployment does not create new demand. We are going nowhere without a real housing recovery which is impossible with gun shy lenders. What little improvement we are seeing in the economy stems from unsustainable government spending. If you think the last stimulus package was tough to get through congress, wait until the next one. With three quarters of Q2 earnings out now, it is clear that company managements panicked and shed staff like a fur coat in a New York summer. This produced a string of top line disappointments and bottom line surprises. Companies can’t continue this, unless they want to shrink themselves out of existence. They are gaining weight by eating their seed corn. I think that if you want to go long here you are risking 10-15% to make 2-4%. It doesn’t look like a good risk/reward ratio to me. I prefer the inverse. There’s no law that says you have to trade every day of the year, despite what the brokers say. Better to keep your powder dry and watch the long players inevitably crash and burn.

Jul 30 01:04 PM

[montyman:]

El-Erian is a bond-man. He's talking his book.

Jul 30 02:21 PM

[Old Trader:]

Montyman,

You're correct, as far as it goes, but keep in mind the bond market has often served as a good "early warning system" for equities, down the road.


On Jul 30 02:21 PM montyman wrote:

> El-Erian is a bond-man. He's talking his book.

Jul 30 05:20 PM