The Dow has held support at roughly the 24,800 level and we see another 1000 points coming, but it will only hold above if it closes above 25800 on a weekly level to actually break out of the current consolidation we have been in since late 2017. At the time of this post, the Dow is trading at 25272. I am still bullish, but we still see this month as a possible reaction high with a retest of support into September/October. In November we could see crazy volatility.
The facts are that the overwhelming majority fear a trade war and/or rising interest rates.
Many mutual funds have liquidated positions on those fears yet the market has held despite all the selling. This means that they will be forced to buy new highs but we are NOT at the end of this Bull Market!
Yes, it is possible that the consolidation time frame I have told you during the first quarter of 2018 could extend as far as 2020. Right now we need to keep in mind that the rise in global taxes has been systemic. Governments only look at what they need right now with no long-term consideration of their short-term thinking.
I want to let my European audience know that the EU and IMF are pushing to triple the inheritance taxes which will cause a total collapse in real estate the banking system there and push them even further into third place. Remember just a three years ago where the Euro was supposed to kill the dollar.
The chips are starting to fall around the world now that the European economy has fallen behind China to 3rd Place. This will make life very difficult for Trump. His hands will be full as the dollar continues to rise on the failures of these other governments.
European governments tax contagion and inept financial management are now being realized and spreading. Europeans know their history and as investors, they move their money to safety. Safety is not Government bonds, but ownership in companies, the stock market. The safest stock market indexes are the US indexes; S&P500, Dow Jones, Russell 2000, and the Nasdaq.
I see growth for the future with continued consolidation and volatility before a breakout.
InterAnalyst has been serving investors globally since 1990. Authoring hundreds financial articles and publications, thousands of trading charts to investors worldwide.