Healthy technical U.S. stock market’s consolidation since early 2016 pullback

After a smooth market ride for nearly nine years, investors have faced a sudden drop in U.S. stocks sent the Dow Jones industrial average down more than 1,000 points Thursday for the second time of the week this plunge was the second-biggest ever in terms of points that stocks saw a short dip before the markets closed, while on a percentage basis,  Monday’s drop was the largest since August 2011 according to S&P Dow Jones Indices, The 3.75 percent decline pushed the Standard & Poor’s 500 stock index down more than 10 percent from the Dow’s last peak was January 26 and not to forget the markets had experienced a pullback in early 2016 and continued its rise especially after the new administration in the White House.

This means the market is technically in a healthy consolidation and does not mean that the bull market in stocks is over for its rise since March 2009, for this reason I can’t call this correction as the steepest drop in the history of the Dow Jones the latest drop in the Dow places the 30 company average into a correction what Wall Street calls a drop of 10 percent or more from an index’s recent peak. It’s the first correction in almost two years in comparison with the Dow’s steepest one-day percentage drop came on October 19, 1987 on “Black Monday”, when it fell 22.6 percent.

As I have mentioned in my post on August 4, 2017  that The Dow Industrial breached the 22,000 level for the first time ever on Wednesday to continue on its highs for next 3 quarters on average before a new correction will take place.

For the moment the markets are healthy and the American economy is doing well but he steepest drops are yet to come.

Keith Mabtoul.

February 11th 2018

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