For starters, this was the 2nd to last post made here.
http://playwithmonopolymoney.blogspot.com/2012/05/here-we-are.html
It was decision time then and the market took off for one of the greatest runs we've seen in market history. New strategies that have been successful for the past 3 years were to buy the high, sell higher (this is a legitimate momentum/trend following strategy), and buying the dip (for just about every investor or trader.)
So what do things look like after last week when the market had a flash crash and huge volatility? Let's first take a look at a weekly chart of the Dow futures.
As you can see above, the bullish trend lines of the past 4+ years were broken. The trend line will need to be retaken, and it very well could be, for the trend to resume. The area to watch has the circle half green/half red. If closes do not get above and hold those former trend lines, then a new trend is in the works. It could be sideways, it could be down. Nobody really knows the future. But it's definitely interesting and important to watch and see. This picture looks pessimistic for the long run with the weekly chart. However, the trend line could be followed up, make new all time highs and never regain the upper side of the bottom broken line. That could mean some unforeseen, quick drops in the future. Those could also happen in the present, but I think there's enough emotional draw that this is just a minor correction in the market to keep buying the dip. We should know more once the Federal Reserve has decided on officially raising interest rates in September or not.
There's also a look at the monthly picture. See below.
This picture makes it look like nothing has changed even longer term. A correction took place and bounced off of major support of a regular bull market that goes back to 2003-2008 run. You can clearly see the financial crisis in 2008 when those trends broke, and it took over 3 years to return over the original trend, but it did.
There's one caveat that I see though, and that's the unfilled circle. The low of the past couple weeks broke through both of the long term monthly trend lines of the past 5+ years. The close of the market tomorrow (8/31/15) will determine if the close for the month stays above the main monthly trend lines for the past 5 years. But looking at the weekly, and at the monthly, the first crack in this amazing run has been made. Staying near the filled green is key. Falling to the filled red would be really dangerous.
What to do about it is the question though...if anything.
