Follow the trend

The bank stocks give you a good idea of the trend of the market (click on the graph to enlarge it).

I noted in the previous post that the bank index violated on the downside the important trendline A, which spans 7 months.

Focus your attention now on trendline B. The bank stocks started heading lower, pointing to a week market. The trend was set by the bank index.

Bank stocks peaked in early August. I wrote a piece to beware the Ides of August. The bank index is now under the trendline B.

Is this the new trend to watch?

One trendline in its infancy should not be used as the final answer to where the market is going. Its trend, however, is one piece of information I do not ignore.

To find out more about my in depth view of the markets and my strategy just visit our website https://www.peterdag.com/ where you can review The Peter Dag Portfolio. You can also call me at 1-800-833-2782 to discuss your specific money management needs.

I will be happy to speak to your investment group on how the business cycle impacts investment strategies and the choice of asset classes.

George Dagnino, PhD
Editor, since 1977