Dec 12th 2014 – Trading With The Trend

As the quote today states, the trend is very much our friend, the trick is getting in on the trend as it changes and getting out when it’s done.  Anyone that has studied my method in some of our courses will agree that the system is very good at getting in at the beginning of new trends.  The issue is that sometimes we have choppy markets where no trend is showing and only indecision is in play.

I think that is where the market was until that last few days.  However, now, clearly a downtrend is in play.  It was either going to break up or break down.  It certainly chose to drive downwards this week.  That being said, I doubt we are in for much of a correction here.  As it is still my firm belief that we will see a new high before the end of the year.

The sentiment and seasonality at this time of year is hard to argue with, as it keeps showing up most of the time.  So my bias is that we will see an end to selling and a further push towards a new high in the coming weeks, possibly starting with a recovery on Monday.

Market News:

U.S. stocks declined on Friday, with benchmark indexes posting sizable weekly losses, as crude’s ongoing slide rattled investors.

The Chicago Board Options Exchange Volatility Index, one measure of investor uncertainty, rose 9.5 percent to 21.97, up nearly 86 percent this week.

Oil prices fell further after the International Energy Agency reduced its outlook for global demand.

Equities around the globe dropped on Friday after November Chinese factory production slowed more than forecast.

U.S. wholesale prices declined 0.2 percent drop in the producer price index in November after a 0.2 percent rise the previous month.

Stocks only briefly trimmed losses after a measure of consumer sentiment in December exceeded expectations, rising to an eight-year high.

The Dow Jones Industrial Average declined 315.51 points, or 1.8 percent, to 17,280.83, down 3.8 percent from the week-ago close, its worst weekly loss since November 2011. International Business Machines led blue-chip losses that extended to all 30 components.

Recording its worst weekly hit since May 2012, the S&P 500 shed 32.99 points, or 1.6 percent, to 2,002.34, down 3.5 percent for the week, with materials falling the most among its 10 major industry groups, with all in negative terrain.

The Nasdaq declined 54.57 points, or 1.1 percent, to 4,653.60, off 2.7 percent from last Friday’s close.

News Sources:  CNN Money & CNBC