The U.S. stock market is at an inflection point. The key question for investors is, “What is next?”
Some traditional TA (technical analysis) believers see a breakout happening.
Let us explore with the help of a chart — if you believe in traditional technical analysis. From my view, traditional technical analysis no longer works as well as it used to; please click here to see the reasons.
Please click here for an annotated chart of S&P 500 ETF SPY. Somewhat different conclusions are to be drawn from charts of the Dow Jones Industrial Average DJIA, Nasdaq 100 ETF QQQ and small-cap ETF IWM. Please note the following:
• The chart shows two key levels.
• By some measures, there is a breakout above the lower key level.
• In our analysis at The Arora Report, the breakout is suspect at this time because it is not decisive and it happened on quadruple witching, when a range of options and futures expire.
• The chart shows five (depending upon how you count) previous attempts to break through this level have failed.
• The chart shows The Arora Report “buy” signal on Christmas Eve at the low of the market.
• The chart shows that The Arora Report correctly identified prior lows as “not likely lows.”
• RSI (relative strength index) shows that the overbought condition has been relieved. This augurs well for a breakout.
• If the breakout becomes decisive, expect the market to move to the higher key level marked “resistance.”
• If the breakout fails, expect the market to move to the support zone shown on the chart….Please read MarketWatch.
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