This week the big news is surrounding the impeachment hearing for President Trump. Depending upon who you listen to, you will get a different view of how serious this is or how it is just about nothing and mostly a political move by those against President Trump. Regardless of where you fall or who you believe, the fact is we may be seeing more volatility because of this issue moving forward.
In addition to this, the US-China trade agreements are a hot topic and has been for some time. One day it is falling apart and the next it is close to being done. With this swing in the news coming out about it, the markets are responding and moving up and down based off what is said that day. We are also likely to see this continue for the future and until it comes to some conclusion as to an agreement or not.
Even with all these things happening we have seen the market move into new all-time high levels. This week we continued to see this happen. While we are not seeing as many earnings announcements come out, it is also important to remember that the economy still seems to be mostly robust and wanting to continue to grow. We need to make sure that we don’t begin to guess when the highs are going to be put in place and focus on continuing to trade in the direction of the overall trend.
This week we are going to look at the weekly charts of all 3 major indexes to see how they compare.
DJ-30:
In this weekly chart of the Dow Jones 30 Futures you can see that the prices have continued this week into new all-time high levels. As you can see, over the last 6 weeks, the market has shown a clear bullish direction and is reaching the point where we may begin to see the cycle change and begin to move down. While the overall trend is very bullish, it would not be unusual to see the shorter-term price action cycle down soon. In fact, this would be what we would want to see in order to look for additional trading opportunities.
NASDAQ:
On the chart of the NASDAQ Composite, we saw prices continue to hold above the prior all-time high to move into areas that have never been seen. After 7 weeks of bullish movement, it would be reasonable to expect the prices to cycle down from these high areas. We need to make sure that we don’t try and guess when this is going to happen but rather wait until we see some evidence that the prices are selling down a bit.
S&P 500:
With the S&P 500, we saw another bullish week where new all-time highs were put in. This chart is like the others in that the current bullish cycle may be at a point where we would anticipate the bears trying to push prices back down again. While this does not make up a down trend, it does become a shorter-term bearish move lower. Once the bearish move down hits a support area we could see the price move back up once again.
During this time, we need to make sure we are using good risk management so we can handle any of the potential volatile movements that could happen with the current news events. Keeping our risk at the appropriate level will allow us to continue to trade without having the risk of taking too big of a loss. Make sure you determine your position sizes prior to entering your trades.