US stock markets went into a new downtrend yesterday with adding yet another to the several days of heavy selling seen lately. This is a strong indicator that institutional investors are selling stocks. The stock market declined earlier in June as well falling back to its 50-day line and then bounced from there. What was not encouraging with that bounce however was that it came with low volumes. Watch how the stock indices reacts when they approach their 50-day lines again, this could give strong indications for the next moves of the market.
A new downtrend means that you should be cautious with your stock holdings and if you don’t sell all your stocks now, at least make sure that you do not let any of your winnings turn into losses.
The main reason we have seen the stock market going up this year is due to the stimulus efforts from the Fed and other central banks around the world. The underlying economic condition continues to be bad. I have been predicting that we will enter a period of deflation which will lead to an economic depression for many years now and there has certainly been nothing in terms of economic uplift or changes in policies over these years that have convinced me to change my stance; rather quite the opposite.
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