Please have a look at the 3 month VantagePoint chart of the Dow Jones Industrial Average Index below:
The Predicted Neural Index (green line) is at 0 (bearish); the Predicted Long Term Difference and Predicted Short Term Difference lines are negative (bearish) and the Predicted Long Term Difference line is trending downwards (bearish). The Predicted Stochastic is at 19.31 and is below its trigger of 31.2 (bearish-usually when the Predicted Stochastic crosses over its trigger and is above its trigger this is a sign of a change in trend upwards); similarly the Predicted MACD is negative and is below its trigger of 26 (bearish); and the Predicted RSI is at 37.36 which is closer to its lower threshold of 30. As you may have observed, the overwhelming sign given by these VantagePoint indicators is that at the moment, the market is trending downwards and is in a bearish phase.
However, with the Predicted Neural Index being at 0 for a few days now and with the Predicted Stochastic at below its low threshold of 20 and with the Predicted MACD being close to its threshold of 0 and with the Predicted Short Term Difference looking like crossing over the Predicted Long Term Difference (if the Predicted Short Term Difference line crosses above the Predicted Long Term Difference line this is usually bullish for the stock or index and there will be a change in trend upwards), this may allow for a very short term move up in the Dow Jones Index. However be mindful of the fact that the CBOE Volatility Index has been trending upwards again and this is a sign that investors have an overall bearish sentiment towards stocks due to concerns over the coming reporting of earnings. So please be very careful when placing trades and watch for the very helpful VantagePoint indicators crossing over their triggers, this indicates that there may be a very short term bounce in the market. However the bounce could be very short term due to some euphoria surrounding the coming inauguration of Barack Obama on 20th of January. However all the economic fundamentals are very weak in terms of the global economy, US economy and the expected earnings of corporations so be very careful.
Yes the interesting thing is that the coming short term bounce in the markets could purely be attributed to the euphoria around Obama’s upcoming inauguration and around Obama generally. Anything “Obama” is doing well, the following was reported in UK’s Telegraph:
Everywhere you look, people are selling Obama merchandise. Analysts say his victory has pumped hundreds of millions into the US economy. More than 700,000 copies of a plate bearing Obama’s image have already been sold and the shopping channel QVC, which has sold all 100,000 copies of a commemorative coin, is relocating to Washington for the week.
The most coveted item on news-stands will be the special edition of Marvel’s Spider-Man comic, which features Mr Obama (a fan of the superhero) on the cover and a storyline in which he is saved from an inauguration day attack.
The superhero theme has been seen as a reflection of the high expectations Mr Obama has created, and the difficulty he will face in living up to his promises when the partying stops.
“When you’re being compared with a superhero, the public’s expectations of you will soar,” says Larry Sabato, professor of politics at the University of Virginia. “Even Spider-Man couldn’t solve the economy.”
Jim Nuzzo, an aide to the first president Bush, predicted Washington will take on a new flavour. “There’s a desire on the part of the intelligentsia to turn this into the return of John Kennedy. This is a return to the best and the brightest.”
But in the few moments he gets to himself over the next week, Mr Obama might reflect that “the best and the brightest” generation brought not only the glamour of Kennedy’s Camelot but also the quagmire of the Vietnam war.
It seems that the President elect has a lot of expectations to meet during his term as President. Only time will tell whether those who voted with him will be pleased with the results but there is no doubt that Mr Obama has energy, enthusiasm, charisma and intelligence in abundance. Let’s all hope he makes the best use of it!
Happy trading and Happy New Year!