![\"Fedex\"](\"https:\/\/i0.wp.com\/www.incrediblecharts.com\/images\/2014\/2014-09-22-fdx.png?resize=525%2C363&ssl=1\" "\\"Fedex\\"")
<\/p>\nWe are now approaching the September quarter-end, normally a volatile time for stocks. Investment managers tend to re-balance their portfolios after month-end, selling off poor performers and increasing cash balances to later take advantage of new opportunities. The result is that stocks tend to dip in October. If the fundamental under-pinning of the market is strong, they soon recover and continue on its merry way. But if there are serious flaws, the sell-off can turn into a rout — as in 1987 and 2007.<\/p>\n
At present the market outlook appears sound and the bull market is likely to continue. I often use transport stock Fedex as a bellwether for the US economy. If the economy is robust, you can expect Fedex to display a solid up-trend. If weak, Fedex tends to lead the market lower. In November 2007 for example, on the monthly chart below, Fedex signaled a bear market several months ahead of the major indices. The present situation is quite the opposite, with the Fedex in a strong bull-trend, having recently respected support at $145. A 13-week Twiggs Money Flow trough above zero also suggests buying pressure. Economic activity is clearly improving.<\/p>\n
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* Target calculation: 145 + ( 145 – 130 ) = 160<\/p>\n
The S&P 500 break above 2010 proved to be a false break, with the market headed for a re-test of support at 1980. Breach would indicate another correction. Declining 21-day Twiggs Money Flow now indicates medium-term selling pressure; a fall below zero would warn of a primary down-trend.<\/p>\n
![\"S&P](\"https:\/\/i0.wp.com\/www.incrediblecharts.com\/images\/2014\/2014-09-22-spx.png?resize=525%2C363&ssl=1\" "\\"S&P")
<\/p>\n
* Target calculation: 2000 + ( 2000 – 1900 ) = 2100<\/p>\n
CBOE Volatility Index (VIX) remains low, however, suggesting continuation of the bull market.<\/p>\n
![\"VIX](\"https:\/\/i0.wp.com\/www.incrediblecharts.com\/images\/2014\/2014-09-22-vix.png?resize=525%2C363&ssl=1\" "\\"VIX")
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Dow Jones Industrial Average also retreated, testing its new support level at 17150. Reversal below 16950 would indicate a correction, while respect would suggest another advance. Declining 21-day Twiggs Money Flow also suggests medium-term selling pressure.<\/p>\n
![\"Dow](\"https:\/\/i0.wp.com\/www.incrediblecharts.com\/images\/2014\/2014-09-22-dow.png?resize=525%2C363&ssl=1\" "\\"Dow")
<\/p>\n
* Target calculation: 16500 + ( 16500 – 15500 ) = 17500<\/p>\n
My conclusion is that the bull market is sound, but likely to encounter some turbulence over the quarter-end. There may be a secondary correction, but respect of recent support levels would indicate a fresh advance.<\/p>\n","protected":false},"excerpt":{"rendered":"
We are now approaching the September quarter-end, normally a volatile time for stocks. Investment managers tend to re-balance their portfolios after month-end, selling off poor performers and increasing cash balances to later take advantage of new opportunities. The result is that stocks tend to dip in October. If the fundamental under-pinning of the market is … <\/p>\n