Bill Poulos is a published author, investor, financial educator, and a retired automotive executive. Upon retiring in 2001 he co-founded Profits Run, Inc. with his son Gregory Poulos. Profits Run is a financial publishing company that provides financial materials to investors on managing their wealth through smarter trades while minimizing risk. Watch this video to learn more about Profits Run. Bill shares his expertise investing with several online platforms, such as Investing, LinkedIn, and here on Medium. He and his wife, Karen, have been married for 50 years. They live in Wixom Michigan where Profits Run is located.
Today we end another strong week in the stock market as most of the indexes moved into new all-time highs. moves have been attributed to some strong earnings numbers that have been released this week. The earnings releases will slow down a bit as we move into the month of August, so we may see prices settle down just a bit. The market continues to be affected by both the expected and unexpected news events that are coming out.
Reports about whether the Fed is going to hold interest rates, raise interest rates or drop them continue to move the markets. US-China trade talks are also on investors’ minds as they are trying to figure out when this might happen. If it does, will it be a good thing or not. The uncertainty continues to make investors nervous about committing funds to the stock market which causes the markets to become more volatile.
This next week we have the all-important FOMC meeting that will be on July 30–31 with the announcement coming out on the 31st. Look for a lot of anticipation and commentary leading up to the announcement as well as an increase in volatility after the announcements are made. Keeping our risk percentage at a reasonable level will help us avoid the possibility of taking large losses if prices move against our positions.
Look at the weekly charts of the DJ-30, SP-500 and the NASDAQ:
This week we are looking at the weekly chart of the DJ-30. When looking at the weekly charts we are looking to see where the longer-term trends are as well as the areas of support and resistance. Over the last 2 months we have seen a strong bullish movement in this market. In addition, we have seen the prices move above the 27,000 level and remain they’re over the last 3 weeks. The longer prices remain above this level the stronger and more likely it is to remain in this area. This area is also where we may see a strong move down if it is to break below it. We can also see that this area may be at a point where it may move back down to the next level of support.
On the weekly chart of the SP-500 we can see that prices moved into new all-time highs this week. This is a continuation of what we have seen over the last month or so. After the bounce off the 50-period simple moving average, the price ran up and has yet to show some retracement. It is likely that we will see prices sell off at some point, even if it is just a small one.
The daily chart of the NASDAQ also shows a strong bullish trend as it has also moved into new all-time highs. This trend is one that we should be aware of as most of the stocks will continue to follow, at least until there is some sort of negative news causing the markets to begin to trend back down again. With the prices in a mostly overbought condition, look for the bears to come in and try to push prices down at some point.
As we see the continued strength in the markets, we need to make sure we don’t become bearish too soon. It is common to try to anticipate a move down, even before anything suggest that it might. We will want to wait for the evidence to be shown on the chart that the trend has been established to the downside before taking bearish action on our trades. As always, make sure you are placing trades using the proper position size, so you don’t become over leveraged in any of your trades.