adding fuel to the fire.
Date Discount Rate Change
---------------------------------------------------------------------------------------
3/7/1986 7.0% Drop in rates in on-going bull market
4/21/1986 6.5% Drop in rates in on-going bull market
7/11/1986 6.0% Drop in rates in on-going bull market
8/21/1986 5.5% Drop in rates in on-going bull market
1985 was a year of market swings that went beyond the normal bands. By itself,
going past the bands is not a reliable signal in itself, one way or another. The
context as well as the internal strength readings must be factored in.
The 1986 trading range was 8%-9% wide at its widest. Buying at lower support in these
cases may be easier knowing that such ranges are normal in an on-going bull market
and that the fifth test of a horizontal support is the one most apt to bring an upwards reversal.
The same concept works in reverse on the fifth test of resistance.
As always, you can use the automatic Buy signals. But in a trading range like this,
the support ususally has to be tested before there can be a recovery back up to the
resistance level.
Flat Trading Range and Consolidation
