The following is just a small excerpt from my latest Weekly Strategy Session (please click on that hyperlink for details about trying it out). which I published for members and 12631 subscribers this past Sunday.
In addition to the S&P, the Dow has also been at the heart of the bull argument for a contained correction in the growth leaders, given the resilience of the Dow’s mega cap stocks. And yet, the Dow has been rangebound itself in 2014, trading at the same level it was essentially last New Year’s Eve. While the daily chart has the appearance of being “coiled” for a move higher, the issue of how sustainable a breakout would be in the Dow is a legitimate concern, given the damage sustained by the leader and indeed many other parts of the market.
Furthermore, it is also quite obvious now, as I mentioned above, that the Dow is acting as an apparently safe hideout for capital. Thus, the odds of a false breakout or bull trap into any further strength from here developing are increased, particularly after a multi-year bull run has occurred.
In addition, Visa and IBM are the two most heavily-weight Dow components. Both should be watched this week for clues. But, even in the resilient Dow, these charts are far from a bullish picture of technical health.
Visa is pinned below a declining 50-day moving average, rendering all rallies suspect. AndIBM has become a quite sloppy chart since its earnings gap lower.
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