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After Last Week's Roller Coaster Where Is The US And World Stock Market Heading? May 22 2017

It is once said that the stock market is the greatest wealth transferring machine in the world. We saw some wealth transfer last week during the volatility. The greedy will give way to the prudent. The early buyers will sell to the late comers. The inexperienced will buy at the top, sell near the bottom while the patient and educated ones will buy in weaknesses to get things cheaper. The whole process repeats itself again and again.

So where is the US stock market and world stock market around the globe heading? Are we resuming the uptrend or is this the beginning of a long decline? Is the Trump trade still on or is the US president going to make things worse for investors around the world. It is at these times investors and traders seek to find the correct answers because mistakes can mean thousands and millions or even billions in gains or losses.

But we always remain objective and look at what the charts are telling us. Charts are not a crystal ball, but if you read them correctly, they offer you a glimpse into the past, the present and the future. Because after all, the stock market is made up of humans with emotions and the emotion of greed and fear is reflected very well in the charts.

Its important to know about where the US markets are heading and what it is doing because:

  1. 75% of stocks follow the direction of SPX, Dow and Nasdaq
  2. 75% of indices in the world follow the direction of these indexes
  3. 75% of stocks in the world follow the direction of these indexes

p.s. I have found that reading this website is easier on laptop or desktop. Charts are a bit small on mobile unless you are a 15 year old with very sharp eyes. Might update some stuff today as the hours go by so you might wana press Refresh button now and then.


Market Outlook

Sometimes I feel like trying to find out the direction of the market is just like entertainment. From experience, I know that what is important is to know the support areas. The important thing is this:

  • When the market is in a long term uptrend, you focus on longs
  • When the market falls its even better
  • 99% of stocks will fall but 1% will show relative strength
  • We focus on the 1% of stocks that consolidates or form some kind of pattern
  • Then when market bounces higher we buy or add to those stocks
  • We leave the other 99% of stocks showing poor relative strength to stock gurus, newsletter writers and smart people to try and bottom fish or play with

I remember a quote by George Soros. It goes like this...

“My financial success stands in stark contrast with my ability to forecast events”. George Soros

If the stock market drops but a stock don't drop but form a continuation pattern. Get ready to buy it. Cos when the market bounces up a bit, you can be very sure the stock is going to rise even more.

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