by Ian Harvey
December 28, 2018
The stock market volatility continues and is now reaching extremes, as has been witnessed so far this week.
To update the previous days that have been experienced read the article “Stock Market Direction??”
Yesterday saw the Dow hit an intraday decline of 611 points, supposedly due to a drop in consumer confidence and geopolitical dramas still surfacing in China; and the partial federal government shutdown stand-off; and then, the last hour and a half saw the market swing upwards to finish in the green.
The Dow closed 260.37 points higher on Thursday and the S&P 500 ended the day up 0.86 percent. The Nasdaq Composite, as well, closed 0.4 percent higher.
Wednesday and Thursday market movements are a reversal of the recent bear market action of recent opens and weak closes.
Reasons for Volatility…..
Low volume, due to the year-end period where many traders/investors are taking a break from the market, will cause a significant change in buy or sells and have a profound impact on the market.
Other issues that are coming to a head…..
Just to mention a few!
It appears that the futures are higher on Friday indicating that the three major indexes in the U.S should be in positive territory at the open of the market.
It may well be true that more economically sensitive, high-quality businesses are going to provide just rewards for investors buying stocks at the current discounted prices.
However, stocks are still on track for their worst December performance since 1931. The S&P 500 is still down 9.8 percent so far this month, while the Dow has lost 9.4 percent during the period.
Expect the volatility to continue into the New Year. There are still a lot of unresolved issues that need to be remedied before moving forward with any concrete success.
Also, a bottoming process may be occurring considering Wednesday's big swing up and Thursday's sell off and then late rally. Major bottoms through history have all required some double bottom – and that is not apparent yet.
But remember, one day is not a confirmed uptrend; and neither is two days.
Future Positive Catalysts…..
There are several major events that could provide the market the fundamental catalysts to resume the bull-run…..
Considerations for Future Investing…..
The last two days could be signaling that the market is searching for its lows. Therefore, there could be more sharp swings higher and rallies before the market bottoms out.
As I mentioned yesterday nobody knows where the market is going -- it is anybody’s guess what is in store for the market movement.
However, it is possible to make money in this market climate where we don’t know what the market is going to do but by having a technical analysis process in place. The secular bull market, when it gets back-on-track, will be led by high growth companies -- stocks like Apple and Microsoft will be at the forefront of helping claw back losses.
Unless, like members of Stock Options Made Easy have done during December, traded options quite successfully and profited – read the following articles…..
I believe that the bull market is still intact!