Online Stock Market Research for Investments and Trading 10/06

Market Timing for 10/05/2005 and chart

The Dow 30 Index (chart below) was down over 100 points today. It can be viewed as slightly oversold, so it may bounce for awhile on Thursday. It closed within a hair’s breadth of an important support level. Continuing to hold until noon EST on Friday when we expect a low point, is a matter of choice. Profits are taken when the market gives them. Lightening up on a short or put position might be advisable if one doesn’t want to hold through a bounce and untill the 24th low.

I have included another chart for Thursday. It shows some weekly trendlines that are to be respected. The support levels are indicated in green. Support is just what it sounds like. A level that might be expected to stop or slow a decline. In general, if a support level is broken and not recovered (get back above it) quickly, technical analysts will look for other indications that a decline is proceeding apace, or is slowing.

[Note the grey contradictory lines above price and the Momentum indicator]

That is where market timing and forecasting time locus points for a trend change can be of great help. Since we expect a short term low on Friday, we have some freedom to decide what to do with a particular trade. Take a profit soon or wait till the later point in the month. A trader would take the profit and usually in incremental price target levels.

An investor would most likely be in cash waiting for a secure low price to be in place and confirmed by other indicators. In the meantime, she will be following her plan to watch for issues to buy that will be settling into a lower level near the time for the broader market lows. She will be executing her programme for profitable investment horizon.

Always be a blessing.

W. B. Busin

** – IMVHMO, will always describe directly whatever I write here in this wonderful forum. It is a slightly altered but common Internet acronym or shortcut. Here it means In My Very Humble Market Opinion.