Best of the Week
Most Popular
1.Is the Stocks Bull Market Over? Dow Trend Forecast into End January 2015 - Nadeem_Walayat
2.Gold and Silver Stocks Apocalypse Now, Bear Market Review - Rambus_Chartology
3.NHS Baldrick Plan to Spread Ebola Across UK - Sheffield, Newcastle, Liverpool, London Hospitals - Nadeem_Walayat
4.Ebola Terror Threat Suicide Bio-Weapons Threatens Multiple 9/11's, Global Plague - Nadeem_Walayat
5.Second-Richest Man Says Mortgages Now a "No Brainer" - Dr. Steve Sjuggerud
6.Gold And Silver Still No End In Sight - Michael_Noonan
7.NHS Baldrick Plan to Spread Ebola Across UK - Sheffield, Newcastle, Liverpool, London Hospitals - Nadeem_Walayat
8.The Gold Bug is Set to Bite Back - EWI
9.How Alibaba Could Capitalize on the EBay-PayPal Split - Frank_Holmes
10.The Consequences of the Economic Peace - John_Mauldin
Last 5 days
Gold And Silver Price - Respect The Trend But Prepare For A Reversal - 25th Oct 14
Ebola Has Nothing To Do With The Stock Market - 25th Oct 14
The Gallery of Crowd Behavior: Goodbye Stock Market All Time Highs - 25th Oct 14
Japanese Style Deflation Coming? Where? Fed Falling Behind the Curve? Which Way? - 25th Oct 14
Gold Price Rebounds but Gold Miners Struggle - 25th Oct 14
Stock Market Buy the Dip or Sell the Rally - 25th Oct 14
Get Ready for “Stupid Cheap” Stock Prices - 25th Oct 14
The Trend Every Nation on Earth Is Pouring Money Into - 25th Oct 14 - Keith Fitz-Gerald
Bitcoin Price Decline Stopped, Possibly Temporarily - 25th Oct 14
Bullish Silver Stealth Buying - 24th Oct 14
Blood in the Streets to Create the Gold Stocks Investor Opportunity of the Decade - 24th Oct 14
Swiss ‘Yes’ and ‘No’ Gold Initiative Campaigns Compete at Launches in Bern - 24th Oct 14
War And The Law Of Unintended Consequences - 24th Oct 14
Tesco Meltdown Debt Default Risk Could Trigger a Financial Crisis in Early 2015 - 24th Oct 14
Saudi Move to Cut Oil Prices Is Now Russia's Biggest Economic Threat - 24th Oct 14
US Stock Market Top Is Now In Sight - 24th Oct 14
New Profit Points in the Shifting Balance of Power, Welcome to Saudi America - 24th Oct 14
QE Failure & Folly Of Paper Mache, Treasury Bond Integrated Lifeline Patches - 24th Oct 14
U.S. Economy Faltering Momentum, Debt and Asset Bubbles - 23rd Oct 14
Annuities - Afraid Your Money Will Vanish before You Do? - 23rd Oct 14
What Debt Deleveraging? - 23rd Oct 14
How to Profit from Massive Spin-Offs with Just One Play - 23rd Oct 14
Evaluating Ebola as a Biological Weapon - 23rd Oct 14
Euro, USD, Gold and Stocks According to Chartology - 23rd Oct 14
Why You Should Always Be Invested in the Stock Market (Even Now) - 23rd Oct 14
Five U.S. Housing Market Warning Signs Point to Real Estate Market Downturn - 23rd Oct 14
The Better Short: Gold or Silver? - 23rd Oct 14
Focus on Graphite Companies with Green Energy and Technology Strategies - 22nd Oct 14
Crude Oil Price Hitting Bottom - 22nd Oct 14
Evidence of Another Even More Sweeping U.S. Housing Market Bust Already Starting to Appear - 22nd Oct 14
Gold Or Crushing Paper Debt Stocks Crash? - 22nd Oct 14
India Gold Demand Surges 450% and Bank of Russia Demand At 15 Year High - 22nd Oct 14
Bitcoin Stock Exchange Could Be "More Valuable than Alibaba" - 22nd Oct 14
Currency War - How to Profit from a Stronger U.S. Dollar - 22nd Oct 14
Banks Hold Treasuries and Make Loans- 22nd Oct 14
Gold and Silver Timing is Everything - 22nd Oct 14
Don't Get Ruined by These 10 Popular Investment Myths (Part VII) - 22nd Oct 14
Follow the Baby Boom to Biotech Stock Profits - 22nd Oct 14
Copper, Nickel and Zinc Won't Be Cheap for Long - 22nd Oct 14
How Will We Know That the Gold & Silver Price Bottom Is In? - 21st Oct 14
Is Gold as Dead as Florida Hurricanes? - 21st Oct 14
First Swiss Gold Poll Shows Pro-Gold Side In Lead At 45% - 21st Oct 14
The Similarities Between Germany and China - 21st Oct 14
The REAL Reason Why the Stock Market Turned Down - 21st Oct 14
Petrobras is a 'Scheme, Not a Stock' - 21st Oct 14
Stocks Bear Market Indicator Is Off the Mark - 20th Oct 14
Stock Market Ideal Turning Point is at Hand - 20th Oct 14
Investors Quit Complaining, The Environment is Perfect Right Now - 20th Oct 14
Ebola Armageddon Could Trigger a Rebirth in Gold and Silver Prices - 20th Oct 14
Gold vs Euro Risk Due To Possible Return of Italian Lira - Drachmas, Escudos, Pesetas and Punts? - 20th Oct 14
Stocks Rebounded Following Recent Sell-Off, But Will It Last? - 20th Oct 14
U.S. Responsible for West Africa Ebola Outbreak Says Liberian Scientist - 20th Oct 14
Stock Market Intermediate B Wave has Started - 20th Oct 14
Gold Stocks Analysis – FNV, CG, NCM, SBM - 19th Oct 14
Stock Market Primary IV Wave Counter Trend Rally - 19th Oct 14
Gold And Silver - Financial World: House Of Cards Built On Sand - 18th Oct 14
Anatomy of a Stock Market Sell-Off - 18th Oct 14
Why OPEC Has Declared an Oil War on Russia - 18th Oct 14
Gold and Silver Extreme Shorting Peaks - 18th Oct 14
Bitcoin Price Fall to $350? - 18th Oct 14
Tesco Supermarket Crisis Worse To Come as Customers Vanish! - 18th Oct 14

Free Instant Analysis

Free Instant Technical Analysis


Market Oracle FREE Newsletter

Stocks Epic Bear Market

Stock Market Dow Theory Shines Through

Stock-Markets / Stock Markets 2013 Mar 01, 2013 - 01:18 PM GMT

By: Christopher_Quigley

Stock-Markets

What a market. Even the most experienced traders that I know are having a difficult time getting a handle on what is happening. Wednesday’s market action caught a lot of folk napping.
Monday’s 216 point drop in the Dow Industrials convinced many that finally the much anticipated market “correction” had arrived.

The slight “uptick” on Tuesday was a classic VIX buy signal but it turned out to be a trap. Those traders who shorted the market on the 26th were pulverized by the bullish 175 Dow point move on the 27th.


What can we make of such whiplash moves?

For me, regardless of the economy, the movement of the market is understandable when you assess it through the paradigm of Dow Theory. The market is powering forward because technically it is very strong. This strength was first indicated by the 128 point breakout in the Dow Transports on the second of January. Prior to this the Dow 20 had traded within a trading line for nearly a year. It was perfectly clear to Dow Theory aficionados that the momentum and the direction of any breakout from this “range line” would be highly significant. The 307 point follow through move on the Dow Industrials on the same day as the Trannies breakout confirmed the trend. With Dow Theory  “ a trend once in place continues until both indices confirm otherwise”. Nothing has happened in the last few days to alter this January bull move. Thus the correct trading strategy at the moment is to go long on pullbacks not short “potential” tops.

Dow Industrials: Daily

Dow Transports: Daily

VIX: Daily

Italy’s election deadlock threatens chaos for the Euro.
Just as we thought the Euro crisis could not get any more bizarre Monday’s Italian elections have thrown another spanner into the works as reported below by James Mackenzie and Steve Scherer for the Irish Independent online on the 26th. February:

 “Italy faces political deadlock today after a stunning election that saw the anti-establishment 5-Star Movement of comic Beppe Grillo become the strongest party in the country but left no group with a clear majority in parliament.

The centre-left coalition led by Pier Luigi Bersani won the lower house by around 125,000 votes and claimed the most seats in the Senate but was short of the majority in the upper house that it would need to govern.
Bersani claimed victory but said it was obvious that Italy was in "a very delicate situation". Party officials said the centre-left would try to form a government but it was unclear what its options would be.
Neither Grillo, a comedian-turned-politician who previously ruled out any alliance with another party, nor Silvio Berlusconi's centre-right bloc, which threatened to challenge the close tally, showed any immediate willingness to negotiate.
World financial markets reacted nervously to the prospect of a government stalemate in the euro zone's third-largest economy with memories still fresh of the financial crisis that took the 17-member currency bloc to the brink of collapse in 2011.
Italy's borrowing costs have come down in recent months, helped by the promise of European Central Bank support but the election result confirmed fears that it would not produce a government strong enough to implement effective reforms.
Grillo's surge in the final weeks of the campaign threw the race open, with hundreds of thousands turning up at his rallies to hear him lay into targets ranging from corrupt politicians and bankers to German Chancellor Angela Merkel.
In just three years, his 5-Star Movement, heavily backed by a frustrated generation of young Italians increasingly shut out from permanent full-time jobs, has grown from a marginal group to one of the most talked about political forces in Europe.”
This stunning election victory by Grillo is an indication as to just how desperate and frustrated European voters have become.

The 5- Star movement is hardly a political “party” in any sense of the word. It is only five years in existence, most of its candidates have no political experience whatsoever and it has no central office or management structure. Yet it has managed to achieve the largest vote of any party in the third largest economy in Europe.

In essence, the victory of Mr. Grillo is a protest vote against the main parties who have allowed Germany dictate an economic policy that saves the banking elite but grants the youth of Europe a life sentence of unemployment.

This youth have called the European Central Bank’s bluff. It remains to be seen what the next move will be from Frankfurt. Yes it can reiterate Chancellor Merkel’s plea for continued austerity but to continue to go down this avenue could be social suicide for Europe as a whole. The 64,000 Euro question is can the ECB save the European Union and the Euro? I don’t think so. To achieve both would only be possible through the total disregard for the democratic process. Europe went disastrously down the path of negating democracy once before and may try do so again. I hope not. I pray that finally past financial policy errors will be recognized and that a new attempt will soon be made by the Council of Ministers to remake the European Union in its original vision. This vision understood Europe to be a society not just an economy.

What Europe needs more than ever are true statesmen or women with the courage to speak the truth and act with conviction. Europe is crying out for politicians of the caliber of Konrad Adenaur or Charles De Gaulle. These former premiers of post-war Germany and France respectively rebuilt their shattered countries through determination, leadership, bravery and integrity. The paths they lead their countries through were tough and arduous but Europeans followed  because they were communicated to with honesty and intelligence. This is not happening today.

With all due respect to the hardworking Angela Merkel, she is not in Adenaur’s or De Gaulle’s league. Dr. Merkel insists that the whole of southern Europe and Ireland succumb to crippling austerity. However, she has allowed her people forget that the rebirth of a new post-war German nation was only possible because a supportive American Congress forgave German war debt reparations and invested, through the Marshal Plan, nearly 1 trillion dollars (in comparable current GDP terms) into German and European recovery. Thus I fervently hope that the German people choose a new leader in the upcoming national elections. Should they decide otherwise, it will mean Europe could be heading for another half-decade of illogical austerity, social stagnation, media obfuscation and political chaos, Italian style.

By Christopher M. Quigley

B.Sc., M.M.I.I. Grad., M.A.
http://www.wealthbuilder.ie

Mr. Quigley was born in 1958 in Dublin, Ireland. He holds a Bachelor Degree in Accounting and Management from Trinity College Dublin and is a graduate of the Marketing Institute of Ireland. He commenced investing in the stock market in 1989 in Belmont, California where he lived for 6 years. He has developed the Wealthbuilder investment and trading course over the last two decades as a result of research, study and experience. This system marries fundamental analysis with technical analysis and focuses on momentum, value and pension strategies.

Since 2007 Mr. Quigley has written over 80 articles which have been published on popular web   sites based in California, New York, London and Dublin.

Mr. Quigley is now lives in Dublin, Ireland and Tampa Bay, Florida.

© 2013 Copyright Christopher M. Quigley - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors before engaging in any trading activities.

Christopher M. Quigley Archive

© 2005-2014 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

Free Report - Financial Markets 2014