Even with the chaotic market, our portfolio managed to record a net gain of 3.95% for Q2 2019which came to an end on 6/30/19; and during June 2019 we had a gain of 9.47%. As I have been saying over and over again, it is extremely important to take the advice of technical analysts when trading or investing in financial markets. On Monday 7/1/19, “Fibonacci Queen”, Carolyn Boroden predicted that the market could take a small dip on 7/3/19 and/or 7/5/19 and then according to technical analysis the market could go up very strongly thereafter. Fibonacci numbers are named after the Italian mathematician Leonard In his 1202 book Liber Abaci, Fibonacci introduced the sequence to Western European mathematics of Pisa, later known as Fibonacci. Fibonacci numbers are strongly related to the golden ratio. What happened to Carolyn’s prediction? On 7/3/19, the market did not go down but on 7/5/19 the market declined and went down till the market bottomed on 7/9/19; then as Carolyn predicted the market continue to climb till the market closed on 7/12/19. Now we are at all-time highs on the Dow, S&P500 and on Nasdaq. On 7/12/19, even the Russell 2000 joined others in breaking the past trend and going up. On 7/12/19, even the Dow Transports went up!
With technical analysis, we have to take a day to day approach and watch the technical indicators to make an assessment of the possible future. No one has a crystal ball and the market does not go up in a straight line; in fact, the market always climb a wall of worries; however the probability is high that we could see a major upswing in the market now. One note of caution; prior to 7/11/19, when the Dow went up, Nasdaq went even higher; for example, a 1% gain in the Dow, would come with a 2% or a 3% gain in Nasdaq but on 7/11/19 and 7/12/19, the reverse was true. If this trend continue, it could mean that the market is topping. Also it could mean a sector rotation which happens often. When it comes to the future of the market, fundamental analysis always take a second seat with respect to technical analysis so it would be interesting to see what happens in the near future. If the market goes down, it would be a buying opportunity. When the biggest chemical company in the world, BASF announced a 30% reduction in expected global revenue, that sent a clear message to our Federal Reserve that the global economy is softening in a big way and they have to take pre-emptive action to lower interest rates to boos our economy which is good for the market. The bond market set the trend for interest rates and due to lower yields on treasury bonds, mortgage rates are very low at this time.
Have a great month!