Market Commentary for August 2018

"Critical mass... "

By Alan Hull

This commentary is in part or entirely created using extracts and comments from my weekly Blue Chip Report. For more information about the Blue Chip Report, including subscription details and a recent sample report, go to Blue Chip Report

Global Stockmarkets are at critical mass and whilst I am closely watching all the major Stockmarkets, there is one that I use as my primary barometer…the NASDAQ. This market has outperformed all others and is the most sentiment driven, having risen over 400% since the start of the global bull run that began in early 2009. Hence if this Stockmarket loses it’s mojo, then I strongly suspect the bull run is at an end.

And right now the NASDAQ is trying with everything it has, to break out to the upside. But before I take a closer look at this potential break out, I think it will help to put the current situation in its broader context. I have been saying for the past several months that global Stockmarkets are at a major inflexion point and this can be seen on a weekly chart of the NASDAQ, where it's taken on a flatter and wider trajectory…

In the lead up to 2018 the NASDAQ was rising steeply in a narrow channel (blue lines). Then it hit the brakes with other world markets and began defining a shallower and wider channel (red lines). Hence we have experienced an increase in volatility and a series of sharp reversals, both up and down. And unlike some other major Stockmarkets (like the Shanghai Composite) the NASDAQ actually remains bullish, given that even its newer channel (red lines) is rising, albeit with a shallower gradient.

The question is; will the NASDAQ actually manage to break out to the upside from where it is now or will it cycle down again? And know that if it does cycle down again, it may not cycle back up again. But we have to wait & see and it has to be a convincing break out as there have already been several failed attempts. Here is a daily chart of the NASDAQ showing how it's struggling with the upper boundary of its trading channel…

Hence we are at critical mass....an upside continuation is about to occur or a reversal. But know that either way, global Stockmarkets have been in a bull run for nearly 10 years and, at it's current level, the NASDAQ has an average price to earnings ratio of 36. This is bubble territory. So I will be either buying shares very carefully if it's a break out or short selling if it's not. And that brings me to this month's sales pitch....my online short selling seminar is now available at www.alanhulltv.com/shortsellingseminar/

There are two parts to this seminar...the theory and the practice. The online version includes streaming videos, the notes in PDF format and audio files in MP3 format for those who like to learn while sitting in peak hour traffic. Anyway, please visit the information page using the link above to find out more or to enrol.

And please note that my advanced course now has less than 10 places left and starts at the end of August. This course is where the rubber hits the road where you will be share trading...and very likely short selling. And you don't have to be that advanced to participate, as we can provide makeup material. Anyway you will find everything you want to know about this course at https://alanhull.com/advanced-course including an enrolment form.