U.S. Stocks: "A Thin Reed to Lean On"
See this price behavior difference between two stock market indexes
by Bob Stokes
Updated: October 29, 2019
When investor psychology is optimistic, stocks will rise despite bad news.
For example, during the past several weeks, there's been ongoing trade tensions, an impeachment inquiry, escalating global protests and Mideast oil field strikes.
Even so, the stock market has mainly trended higher in October.
But our analysts now see potential trouble ahead. Here's how our Oct. 25 U.S. Short Term Update began:
In a boy's adventure novel in the late 1800s, an English author wrote that "a lad of eighteen was a slender reed to lean on" in times of danger. A reed, a tall and thin type of grass, is too narrow to provide a foundation of support; hence the term "it's a thin reed" to refer to something that might seem sturdy but would break if leaned on. This may be an apt metaphor for the current stock market environment.
Thus, the name of this chart from that same issue of the Short Term Update, which went on to say:
In Wednesday's Short Term Update we discussed the diverging behavior between the DJIA and the S&P 500, with the S&P rising and the Dow lagging. ... Today, while the S&P 500 carried to meet its prior all-time high, the DJIA remains below its July 16 all-time high and below both the September 12 countertrend rally high and the October 15 countertrend high. The non-confirmation is growing between the market's two blue-chip stock indexes.
As EWI's analysts have noted before, fractured markets are unhealthy markets.
But, as always, the key determinant in the the stock market's future price path is the Elliott wave model.
Find out what our Elliott wave experts expect next for the S&P 500 index and the DJIA.
You can do so risk-free for 30 days. Look below to learn more.
Stressed Out From Dealing with "Mr. Market" by Yourself?
Here's a remedy: Put our team of Elliott wave experts on your side.
Their decades of market experience can help you navigate the market's uncertainty.
You don't need more stress, so we've made it easy to try our Financial Forecast Service, via a risk-free trial.
Look below to learn more...
Your Financial Forecast Service Team Helps Put YOU in Control of the Market’s Trends and Turns
Your Financial Forecast Service guides -- three of the best-known market analysts in the world:
- 1. Robert Prechter, Author of 16 market-related books, New York Times Best-Selling Author and Editor of Elliott Wave Theorist
- 2. Steven Hochberg, Editor of the Short Term Update and Co-editor of The Elliott Wave Financial Forecast
- 3. Peter Kendall, Author of The Mania Chronicles and Co-editor of The Elliott Wave Financial Forecast
As featured in:
You can be ready for risks and opportunities that catch most investors by surprise
Risk-Free, Start Your Subscription Now
for 1 month of unparalleled market insights