Earnings "valley" means trouble ahead for stocks .... Simple Rules

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Derek  24 Jan 2019

Good morning,

A deep earnings "valley" means trouble ahead for stocks, a strategist warns.
Technically we are in overbought territory which is not a buying area. Earnings might drive stocks down again into oversold territory to give better opportunities again.

The DOW made a long leg doji in overbought territory to confirm uncertainty.

Even my old favorite, Bank of America, was so overbought with excellent results, that profit taking stepped in. Notice that FrontRunner also broke down and the MACD is making red bars.

See the same uncertainty on the graph of INTU. 4 Doji's in 5 days in overbought territory.

JSE Technichal:
FirstRand was overbought and then started to make a J-curve correction to take it out of the overbought territory. It looks like it wants to complete the J-curve.

Dis-Chem Pharmacies is busy concluding a formation I showed before. It drops sharply and then moves into a sideways movement. The next drop is then the same distance as the first one. Notice that we are now in oversold territory. A share to watch! I do not like the deep dip of FrontRunner?

Simple Rules:
Keep the rules simple. Take profit in overbought territory and wait for oversold areas to invest again. We made the indicator tools simple in TradeFX to highlight this with colours.

Enjoy your day.
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