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Wednesday's Update

Wednesday, August 13th. - Stock Trends, Charts, and Commentary
                                          (***If you see last week's Wednesday Update: Click Here)

Today's chart is not a chart for short term investors, or day traders.   Instead, it gives a longer term view of what is going on in the market.

The chart is a "Monthly" chart of the NYA Index going through the last Bull market and the current Bull market.   The chart's intent is to show how and when the last Bull market ended and how that compares to the current Bull market.. 

First, look at the 2004 to 2007 time period and the blue arrows we drew on the 11 month RSI (Relative Strength).    When you look at it, you can see that the RSI made a lower/low and then a lower/high before failing to the downside (red arrows).   (A lower/high and a lower/low is the definition of a down trend.)  After failing to the downside, the stock market began the Bear market.

Looking at what we have now is a little different.   We did not make a lower/low, but we did make a lower/high at the red arrow.    After that, the RSI  broke a support, but still has the red support line to contend with. 

The point is that this is a dangerous place to be because the market is at a pivot point.   When you consider that money has been recently moving out of junk bonds to government bonds (higher safety), then there should at least be room for concern.   After all, the junk bond yields fell 58% and in the past, such fears were a prelude to trouble ahead.  

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