What’s making this Stock market so resilient

Dow Jones will trade higher in 2016

The market has resisted all attempts to correct. We know why it’s not crashing; this has to do with mass psychology, but what’s preventing it from letting out a meaningful dose of steam.  The table below might hold the answer.   We looked at all 30 components of the Dow on the weekly and monthly timelines utilising our indicators, and the results were quite surprising, to say the least.

What’s making this Stock market so resilient

Focus on the monthly section and you will notice that 28 components of the Dow are in various oversold conditions ranging from mild to extremely oversold. Conventional logic would have you believe that all the components would be trading in the overbought ranges.

The strength the Dow 30 stocks are showing on the monthly charts, clearly indicates that the most hated stock market bull still has plenty of room to run before it drops dead from exhaustion.  However, at the moment the stock market is rather overbought and so it would not surprise us if it let us some steam.  In fact, it would be very healthy for this market to let out a nice dose of steam before it surges higher.  Oil and the Dow tend to trend together; oil pulled back, put in a bottom as expected in the $40.00 ranges and is now trending higher. Thus the Dow should follow in its footsteps; a minor correction before powering off to new highs.  We discussed this in a recent article titled ” oil bottom likely to propel Dow Jones Higher

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  • Interesting analysis. As long as people in mainstream media keep warning about an imminent crash or overvalued markets, I think this bull market will continue to climb a wall of worry.