Party Like It's 1964 - Part 2

Two weeks ago I posted,

Party Like It's 1964

The Dow Jones Industrial Average DJIA rose 181 points on Friday, making it the ninth straight weekly gain for the Dow and the first time since 1964 that the DOW rose in the first 8 weeks of a calendar year.

This recovery since the Christmas lows is primarily due to Fed Powell succumbing to the Markets demands and putting its interest-rate policy on hold.

Since Christmas Eve, the DOW is up nearly 15%, but the momentum is slowing down. The recent saga in the US-China trade deal is the Trump administration an enforcement provision, which it says China must accept in exchange for any reduction in the extra tariffs. However, Chinese officials don't want an enforcement provision our of fear that future administrations, could reenact tariffs at any time and restart trade frictions.

We also heard from Mr. Mario this week.

The European Central Bank surprised the world (but it wasn't really a surprise) plans to deploy additional stimulus, a sign that Europe is hurting with Italy in recession and Germany’s economy about to go into recession.

Thus, the DOW didn't hit the daily supply, but has pull back within the monthly supply zone.

Now price find itself right above the 200 simple moving average. Discretionary and system traders, market analysts and algos will use the 200 moving averages as support and resistance now. In addition, the 50 simple moving average is starting to point up, the starting basis for a golden cross. The golden cross is a candlestick pattern that is a bullish signal in which a relatively short-term moving average crosses above a long-term moving average, a sign that the uptrend is intact.

But as you know, moving average are lagging indicators. The best indicator is price action. Thus, I will be watching the the daily demand level at 24900, which has held up once already.

However, a breach of that level, would sign that we are headed lower.

This post is my personal opinion. I’m not a financial advisor, this isn't financial advise. Do your own research before making investment decisions.