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Technically Speaking: 10-Reasons The Bull Market Ended In 2018

In this past weekend's newsletter, "Bulls Hang On By A Thread," I suggested a rally was likely due to the short-term oversold conditions that currently existed. To wit:

"For now, we want to give the bulls the benefit of the doubt, but that 'bit of rope' is awfully frayed at this juncture. If the market hits our target zone or breaks support, as shown below, we will reduce portfolio 'risk' further."

"My best guess, at the moment, is that 'someone' may well try and talk 'the Donald' off his aggressive posture over the weekend. If the markets get some 'relief,' a rally back to resistance is likely."

By Monday morning, the catalyst was in place as statements made by Trump over the weekend, which were described as conciliatory, sent the markets rallying early on the hopes a U.S./China trade war could be averted.

However, while the reflex rally was nice, most of the gains were lost by the close as concerns rose of the FBI's raid of the office of Michael Cohen, Donald Trump's attorney, searching for communications between Cohen and the President.

The market just can't catch a break.

More importantly, the failure to break out of the current downtrend channel is rapidly pulling the 50-dma towards a cross of the 100-dma. Such a downside cross will be "just another brick in the wall" for the continuation of the bull market in the short term. (My apologies to Pink Floyd.)

The good news is that futures are pointing sharply higher this morning and we should have another shot at a rally. If we can hang on to the rally, it should bring us very close to registering a "short-term buy signal." Such a signal should theoretically provide enough "gas" to the market for a rally back to the 100-dma or even the previous downtrend

This article was written by

Lance Roberts profile picture
Unique, unbiased and contrarian real investment advice

After having been in the investing world for more than 25 years from private banking and investment management to private and venture capital; I have pretty much "been there and done that" at one point or another. I am currently a partner at RIA Advisors in Houston, Texas.

The majority of my time is spent analyzing, researching and writing commentary about investing, investor psychology and macro-views of the markets and the economy. My thoughts are not generally mainstream and are often contrarian in nature but I try an use a common sense approach, clear explanations and my “real world” experience in the process.

I am a managing partner of RIA Pro, a weekly subscriber based-newsletter that is distributed to individual and professional investors nationwide. The newsletter covers economic, political and market topics as they relate to your money and life.

I also write a daily blog which is read by thousands nationwide from individuals to professionals at www.realinvestmentadvice.com.

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