Dow & the Immediate Outlook

www.armstrongeconomics.com

QUESTION:

Marty, at the WEC you said the Dow would go down in the first quarter. How far do you see this going this time?

ANSWER:

We elected a monthly Bearish Reversal at year end and closed lower than 2014. The main support starts really down at 15850 level followed by 15370. We can see even technically the Stochastics are showing a correction is forming and we lost the upward momentum. A monthly closing beneath that level will confirm a deeper correction. Many people expect the stock market to decline with higher interest rates domestically and others see that an uptick in US rates will be the kiss of death to Emerging Markets which will be bad for the world economy as a whole. Keep in mind that these are likely to put a bullish spin yet of the dollar fueling the deflationary spiral for now. I have stated that this is critical to understand the future.

We have initial support forming at the 16886 level and a weekly closing below that will confirm a continued decline. Our Daily models warn of important support starting at 16930.

Volatility should rise doing into next week and we have a slew of Directional Changes in a row on the Weekly level warning of a very choppy market ahead into early February.