Investor’s Business Daily (IBD) set the market status as a Correction on January 4, 2016; that lasted for about three weeks until Tuesday’s weak follow-through day, when they felt the market was back in an Uptrend. But then on Wednesday, IBD downgraded the situation to Uptrend Under Pressure, only to upgrade it again on Friday.
Why all the volatility? Some of the glee is due to rumors of Saudi Arabia cutting oil production and a few good corporate earnings reports (Facebook), but mostly the market is moving up on faith in central bank stimulus.
Late last week, China began to flood their economy with over 1 trillion Yuan in anticipation of Chinese New Year and the European Central Bank said they would do whatever it took to stimulate their economy. Wednesday the Federal Reserve took a less aggressive stance on 2016 rate hikes and on Friday Japan imposed negative interest rates.
In a word, the global economy is STAGNANT.
I think the stock market euphoria will be short lived, maybe a week or two at best. The S&P500 will hit progressively stronger levels of resistance at: 1950, 2000, and 2050. I’m counting on a pullback.
——————————————————————————
Listen to the Wealthsteading Podcast to receive updated market commentary:
The 10 Wealth Building Principles can be heard at:
http://www.wealthsteading.com/category/wealth-building-principle/
Subscribe to the Wealthsteading Podcast:
via iTunes: https://itunes.apple.com/us/podcast/wealthsteading-podcast/id896417058
Building Wealth, Investing, Retirement, Stock Trading, Money, Freedom
——————————————————————————