Trade with Precision founder Nick McDonald says he is seeing the strongest indicators yet that the markets are finally recovering…
“I see a lot of potential for a complete change of direction because of some very positive signs coming into the market,“ he says.
Not only did his prediction prove correct, but the NASDAQ is now appearing to lead the other indices up too.
Nick says the next big test will be if the Dow futures can break the 9,000 barrier.
“If we break that, we’re looking very strong indeed. That doesn’t mean the market can’t sell off, because I think it will. But it looks like a change of trend and any sell-off will not break prior lows. When the S&P future also breaks 1,000 points it will confirm this is not just a weak bear market rally, but that we’re leaving the bottom of the market behind,“ he adds.
Comparing the current downturn to previous ones, Nick says we are actually in a comparatively favourable position.
“In the bear market of 2000 to 2003, when the market went from up to downtrend, we didn’t hang around at the bottom for long. We turned from down trend to uptrend and into a long sustained bull market.
“We’ve had our down move and are looking for a change of trend. Just because we’ve sold off doesn’t mean we have to stay down for a long time. As things pick up we can move straight back into an uptrend quickly, and who’s to say it won’t be now?“
Even the 1987 crash appears as little more than a blip on the historical DOW chart, Nick points out.
“We remember 1987 as such a big down day… traders still talk about it today. But it took very little time to recover. We went from a sudden bear market back into bull market.
“If we see the markets continue to move as they are, we will see the economy follow along with much more positive reporting in the press. People will start to have more confidence and will start to buy more stocks.“
One thing is for sure, you will see the signs in the charts before you see the signs in the newspaper.
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