US markets have been lack luster to say the least recently. In just the past three months, the Dow Jones Industrial Average has fallen well over 1,500 points and looks to continue on the downward trend. So, what's causing the downtrend? Is there anything that tells us that the Dow is expected to rise anytime soon? What can we expect moving forward; and how can binary options traders take advantage of the trends? I'll answer all of these questions for you today!
What's Causing The Downtrend In The Dow Jones?
The answer to this questions really depends on who you ask. However, one of two factors will come up in just about any discussion revolving around the Dow declines. My personal opinion is that they have both played a big part. Here they are…
Global Economic Conditions – Global economic conditions, particularly economic conditions in China, are less than appealing by any stretch of the imagination. The bottom line is that the global economy is struggling; and since the United States economy is heavily dependent on other economies around the globe, this can cause big issues for the US. Therefore, investors are reacting negatively to what they're seeing around the world.
The Federal Reserve – The Federal Reserve is also a big topic among investors for the past year. Toward the end of the year 2014, the Federal Reserve started to talk about increasing interest rates; which concerned investors. After all, the lower interest rates are, the more money consumers have to spend; ultimately pushing corporations up! So, investors have been reacting to these comments for quite some time now. While concerns that consumers will have less to spend played a role in declines earlier in the year, at this point, concerns seem to have shifted to the state of US markets based on Fed comments. Ultimately, the Federal Reserve has been incredibly indecisive; which raises concerns in the minds of investors.
Between these two problems, we have the cause of the declines. The simple fact is that I can't imagine the Federal Reserve or the Chinese economic issues causing such issues by themselves. However, the two combined are definitely a reason for concern.
Have There Been Any Signs That Anything Is Going To Change?
In my opinion, the answer is no. The simple fact is that the Federal Reserve has been incredibly indecisive; and until they come to some kind of solid conclusion, we can't expect to see much positivity on their behalf. On the other side of the fence, it took years for China's economy to have the problems; and those problems aren't going to be fixed in a short term period of time. It just doesn't work that way.
What We Can Expect To See Moving Forward & How You Can Profit From The Trends
Moving forward, as I mentioned above, I'm not expecting to anything change anytime soon. With that said, we can expect to see more declines coming our way. Keep in mind that there will be good days in the midst of overall downtrends. Nonetheless, we are likely to see more bad days than good for quite some time. With that said, you'll want to look for the good days as signals for put option opportunities. Throughout the majority of the correction, we've seen a pretty decisive pattern. We will have one good day followed by one or two days of declines. Therefore, making the prediction that after a day of uptrends we are likely to see downtrends is likely to be a solid prediction. Be sure to check our latest financial news.
What Do You Think?
Where do you think the Dow Jones is headed and why? Let us know in the comments below!
[Image Courtesy of Zimbio]