Stock Market Analysis: First Half of the Year Coming to an End
As we move into this next week, we will come to the end of the first half of this trading year. We have seen a lot happen in the first 6 months of 2021 and are likely to continue seeing a more volatile market as we move towards the end of the year. With volatility comes the need to make sure we are using good risk management in all our trades. Make sure you are aware of how much you are willing to risk with each trade you take as well as your portfolio.
This is also a good time to see how things are going with your trading. Knowing your trading statistics is important in developing confidence in your trading plan. Take some time to see what your win: loss ratio is as well as your average win: loss ratio. These two things will help you know if your trading is profitable or not. It can also help you know if you need to make changes in your trading so you can become even more profitable.
The big news seems to be about how the economy is doing and whether we are going to see a strong rise with inflation. This last week we saw some numbers that may indicate we are going to see a time of higher inflation and interest rates. On Friday we even saw the core personal consumption expenditures price index rise 3.4% which is an indicator of inflation. This rise was the fastest increase we have seen since the 1990’s. We will continue to monitor what is happening with this as we move into the second half of the year. Also, this upcoming Friday we will have the non-farm employment numbers come out which is another important report to keep an eye on.
Today we are going to look at the daily chart of the DJ-30 and NASDAQ:
Last week we saw the price of this index drop down and close below the recent support area as shown with this red horizontal line on the chart. This week we saw the bulls jump back in and move the prices right back up and off this area of support. The next level we will need to monitor is whether we will see price push above the past highs. If price can make it back above the past high, we are likely to see a continuation of this bullish trend. If the price fails to take out the past high, we may see a time where the price just moves sideways for a while. Either way we will continue to monitor and look for the best trade setups.
This week we saw the NASDAQ continue its bullish run higher and even move into new all-time highs. We will monitor this chart to see if this swing up is ready to start coming down. We know that the market will cycle from bullish to bearish as it trends both up and down so we will want to watch for signs that the current bullish cycle is coming to an end.
Bill Poulos is a retired automotive executive, investor, and a financial educator. After retiring from General Motors in 2001, Poulos drew on his decades of trading experience to co-found Profits Run with his son Greg. A financial publishing company, Profits Run, Inc. strives to teach ordinary people smarter trading techniques with good adherence to risk management. Profits Run offers 20/30 Wealth Trader, Crypto Profit Alert, Instant Options Income, Real Wealth Alert, Premium Income Alert, Earnings Profit Alert, Premium Income Letter, Rapid Income Engine, Forex Profit Accelerator 2.0, Profits Run Coaching, and Profits Run Alliance. Profits Run is located in Michigan, where Bill lives with his wife, Karen of more than 50 years. They have three adult sons and two grandchildren.