Stock Market Analysis: Prepare for Success

Bill Poulos is the president and one of two co-founders of Profits Run, Inc. Bill and his son, Greg Poulos, started the financial publishing company in 2001. Profits Run educates the novice stock trader about making wise investments with minimal risks. They are responsible for helping more than 150,000 people with their publications, software, videos, and coaching. Automatic Income Engine, 20/30 Wealth Trader, Earnings Profit Alert, Crypto Profit Alert, Premium Income Letter, Rapid Income Engine, and Premium Income Alert are amongst the products Profits Run offers. Bill gives back to the community and celebrates those that do amazing deeds to change lives for the with the Profits Run Starfish Award. Poulos married his high school sweetheart, Karen, in 1969. They reside in Michigan, where Profits Run is located. Here, he updates us on the latest stock market trends.

As we move into the mid part of the month of August, we still have a lot of news that is causing the markets to remain uncertain and less deliberate that we would ideally like to see. This is a good reminder that what is important is to look for good trade setups and not just anything that comes around just so we can say we are trading. Our goal should be to find good trades that give us the best probability for success. This means we may need to be a bit patient as we look for these trades. Becoming impatient can cause us to take trades even if they are not the best ones for us.

We continue to see the impact of the pandemic influencing the overall economy. With the number of cases beginning to show signs of slowing, we may see some confidence begin to come back into the markets. The key reports will be to see if the unemployment rate drops and the number of jobs continue to increase. One key element that is going to come into play this month is the effect of schools reopening. If we see a spike in the number of cases with the opening of schools, we could see another push to shut things down once again. This, of course, would be another hit to the economy if this happens.

Another topic that will certainly impact the markets and economy these next few months will be the upcoming presidential election. The comments that the candidates make in public and during debates will certainly bring volatility in the markets. Regardless of who is leading in the polls this will be a major issue moving forward.

Today we are going to look at the weekly charts of the Nasdaq, DJ-30 and the SP-500:

Nasdaq

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The weekly chart of the Nasdaq continues to be the strongest moving of the three indexes we are watching. Over the last 20 or so weeks, this market has done nothing but move up. With just a few weeks of slowing movements during this time, the overall bullish direction continues to be strong. While this is a strong move, we know that it will begin to slow at some point in the future. We will continue to look for the downward movement to happen but only after it takes out the current trend lines it is following.

DJ-30

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The weekly chart of the DJ-30 is similarly bullish but unlike the Nasdaq it has yet to completely recover from the drop back in March. While it is reasonable to think it could move up to take out the old high, we will need some positive news to be the catalyst for the next move higher.

SP-500

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Over this past week, the SP-500 has continued to move higher and test out the past all-time highs. While not able to clearly break above the highs, it has shown a complete recovery of all the drop from the early pandemic days. This too will need to have another catalyst to push through the past highs.

As we move into the end of the summer and the beginning of the school year, we will be looking to see if the bullish momentum will continue or if things will begin to settle down a bit. With the pandemic, economic issues and the political environment we are currently in, we could see an increase in the volatility in the markets. Because of this, make sure you are using good risk management in all your trades, including the use of a good stop loss area. Have a great weekend.

Bill Poulos is an author, retired automotive executive (General Motors), and co-founder of Profits Run, Inc. Bill offers insight into the economy and trading.

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