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In the near term the DOW has arrived. There is not a lot more major travel for the time being – up or down – even though you may ‘feel’ the market is a little frenetic and the media/analysts beat it up. I believe US markets have arrived in the zone. Look at the DOW short term and you can see we are in a range trading mode:
click chart for more detail
Almost no matter what daily chart I look at I see range trading in the coming weeks. This does not mean we will not see some volatility. We will still see moves up and down but the sort of volatility we have seen throughout 2007 should settle down for a while.
But further out what are we likely to experience? Here we take a look at a weekly chart – a 60 week:
click chart for more detail
The chart indicates we are likely to see a pullback in the next several months but not an all ‘hell and damnation’ one. It implies there is a fair chance we may see a pullback to the August low of this year. If we were to experience that overnight then yes that would be volatile but if the DOW was to slide down over weeks then maybe we can cope. How it happens we have no control over.
I acknowledge there are many uncertainties regarding the US outlook – credit woes, consumer housing and spending uncertainty, the Fed’s possible moves on interest rates, and the possibility of a recession – but despite all that I believe we will see a ‘soft landing’.
Enjoy the ride!
Tom Scollon
Chief Analyst
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