In the three preceeding sections (blogs) I explain my background (EW Lives), an historical view of the stock market (Current Market), and my EW count (Current count). This section will be used for a short term reading of what is going on in the markets, and will be updated weekly or when there are sudden events.
Coming off the April lows all indices rallied nicely. However, during the minor sideways activity in June/July the DJIA diverged from the COMPX by taking out it’s June lows in July. This divergence indicated that this four month advance would be a weak one. All major indices must move in unison for a significant advance to occur.
The DJIA peaked at 10,705.55 in July and the COMPX at 2218.15 in August. For the past three weeks both indices have been declining until yesterdays lows (8/24). It does appear that a three week zigzag has completed. Let’s call this wave A of an ABC decline. And, today (8/25) should have started the counter trend rally. Expecting a week or two on the upside, then another wave down to complete this correction from the recent highs. Over head resistance at about 2160 – 2180 COMPX and 10,550 – 10,600 DJIA.
I’ve been staying away from most stocks during this decline and only in special situations and biotechs. The biotech stocks have significantly outperformed all the major indices since 2002. These are the future Genetechs and Amgens! They seem to work no matter what the overall market is doing. Check out LIFC, MYOG and AMLN! But don’t touch these stocks now they have already made most of their gains. A word of caution, biotechs are very volatile and not for the conservative investor.
Good luck and BETTER investing!