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If It Walks Like A Duck, Quacks Like A Duck, It's A Duck!

Adam Hewison - MarketClub

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Hello MarketClub members everywhere! As the month of February rapidly comes to an end in just three trading days, I thought it would be interesting to look at where the markets closed at the end of January, which as you know was a very volatile month.

So here the closing values of the major indices, gold and crude oil on January 29th:

DOW (INDEX:DJI) -  16,466.30
S&P 500 (CME:SP500) -  1940.24
NASDAQ (NASDAQ:COMP) -  4601.42
crude oil (NYMEX:CL.J16.E) - 34.58
Spot gold (FOREX:XAUUSDO) - 1122.07

As I write this, the DOW is pretty much flat for the month, the NASDAQ and S&P are both lower. Crude oil is also lower for the month of February.

The only bright spot is gold, which is up dramatically for the month.

As traders we sometimes get caught in the minutia of the markets, meaning the intraday swings, the hourly swings, etc, etc. The important part is not to forget how the markets closed for the week and the month. That's what really matters because that's where the big trends are measured.

Translating the post title into trading terms, if the market is lower for the month, then the bear trend remains intact. We saw a sharp daily reversal yesterday which did nothing to change the longer major trend of the markets.

I highly recommend that you look at the Trade Triangles when it comes to stocks, futures, Forex and precious metals. In stocks, look at the monthly Trade Triangle for the big trend. In the futures, Forex and precious metals markets, look at the weekly for trend and the daily for timing. The reason for that is because those markets tend to have a different rhythm than stocks. It's not to say that the monthly Trade Triangle for those markets is not important, it acts as a confirming tool.

No one knows exactly how the markets are going to close on Monday, the end of February, but I would suggest that there's a strong possibility that gold and crude oil are going to continue their trends.  

The major market indices are somewhat in the balance, but I would expect them to close flat or lower for the month.

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