In what has got to be one of the wildest weeks of trading, the DJIA manages to finish the week higher. However, it still ended the week on a low note.
This is one week where both the bulls and the bears don’t know if they’re coming or going with the index acting like a bungee cord. One moment it’s extremely negative, and then give it a few hours, it’s substantially positive. Go figure.
If we take a look at the weekly chart of DJIA, we’ll notice that the previous week was the worst in the past d
ecade, at the very least. The selling pressure for that week was so significant that the bar was quite long that this week’s trading is nothing more than an inside bar, meaning that it might succumb to more selling pressure in the coming weeks. In fact, it’s so bad that the MACD fast line just fell into a ravine.
On the daily chart, it doesn’t show the DJIA settling down anytime soon. It’s so volatile that a 500 to 800 point trading range is becoming a common phenomenon on a daily basis. In fact, many investors are now not shocked anymore to see this kind of volatility that they’ve become apathetic to what’s happening and have just decided to let things settle before they even make a move.
At this point, we can only speculate that the market could be starting to consolidate. The problem is, it’s very hard to see through all this instability to make a firm call. When in doubt, don’t make a move.