Watch these levels for a buying opportunity

 

Followers of Dow Theory may have noted the divergence between the Dow Industrials ($INDU on the chart–blue line) and the Dow Transports ($TRAN on the chart–black/red line). This may have been one of the warning signs of the current correction. To be honest, I didn’t expect a correction to happen for another week or two, but the signs were there for a correction to happen sooner rather than later. Here’s my blog from last week suggesting a February correction–again, I was a week or so late in predicting the timing – but my main point was to brace for an inevitable pullback: https://www.valuetrend.ca/?p=2718

dow theory

 

I’ve drawn a regression channel using the stock charts Raff Regression tool on the S&P 500 chart below (solid blue lines). Simple analysis of support suggests that 1775 will be the next significant support level. This level lines up with an orderly selloff (approx.  45 degree angle) to the bottom of the channel noted by the pink lines. Support at around 1725 lies around 1725. A more aggressive selloff might bring the S&P back to 1725–see the dashed green line on the chart. That would likely line up with the bottom of the bottom of the regression channel.

S&p LONG

Either way, I’d expect that this correction may be short lived. I sold a little equity in the ValueTrend managed equity platform a week ago (www.valuetrend.ca), and hope to deploy that cash into 1-2 new positions as this correction plays itself out. As an investor, its always good to take advantage of interim corrections within a primary uptrend. I’ll be talking about a few individual opportunities on my BNN appearance tomorrow night. Feel free to email the show today (specify the question is for me) or call in during the show (contact info for BNN below) – don’t forget to mention that you follow my blog!

 

Keith on BNN tomorrow 6:00pm

BNN television MarketCall: Tuesday January 28th, 6:00pm EST. Phone in with your questions on technical analysis during the show. CALL TOLL-FREE 1-855-326-6266. Or email your questions ahead of time (specify they are for Keith) to[email protected]

Keith Speaking at the Oakville public library (central branch, 120 Navy St.) this week: Thursday January 30th, 7:00pm EST. Free admittance, Keith will discuss technical analysis strategies from his book Sideways

Keith Speaking at the Orangeville public library next week: Tuesday February 4th, 7:00pm EST. Free admittance, Keith will discuss technical analysis strategies from his book Sideways

2 Comments

  • Keith:

    Watched your guest appearance on BNN and you have recommended BIP.UN in the past and currently own it. Are you at all concerned about the lack of clarity in the Brookfield company structure?

    Reply
    • Hi Terry
      Yes, I’ve recommended BIP in the past–I’ve owned it for 2+ years. I know its a complicated in structure, and have discussed that with my fundamental analyst. He feels comfortable with it, and the trend remains up. We’ll hold so long as it doesn’t show technical or fundamental deterioration.

      Reply

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