Weekly Stock Market Review

The stock market is bullish as it has had a series of higher highs and higher lows since the June 4 low. Draw a support line from the June 4 low through the June 28 low. Then put a line parallel to that on top of the highest high between those two dates (on June 19 or 20 depending on which index you are viewing). Voila! You now have a trend channel. One opportune time to buy is when the market softly stops going down near or at the bottom of this trend channel. But right now the market is in the middle of this channel.

Another way of looking at Friday’s drop is to see where it is versus the small up trend that started on June 28. All three indexes are above the mid point of this gain (the DOW bounced off it). Ideally the market will continue to respect this mid point and provide us with an entry. Friday’s down bar was not an entry even though incoming demand pushed the market to close much higher than its lows. This is because the day’s volume was ore than Thursday. We’re looking for a weak down bar with lower relative volume (i.e., relative to the previous several bars).

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