Mass Layoffs on November 2019

 

For Education Only

 

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The mass layoffs, job cuts, store closures keep coming.  Lowes said they plan to close 34 stores, including 6 in Canada including.  Stanley Black and Decker also announced layoffs.  We see the auto industry is struggling around the world as well as transportation… Volvo is impacted by both and we see the company announced hundreds of layoffs due to poor conditions.  Timken Steel has seen a decline in business due to the energy sector slowdown and has now announced plans to close a manufacturing plant in Houston TX.  Cummings announced plans for 2,000 layoffs.   It seems the 2019 mass layoffs are accelerating.

 

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Despite the layoffs major stock indexes are advancing today, November 25, 2019, at 11 AM Eastern Time. For example, the Dow is up 130 points, .47%  advance, and the S&P 500 is up 19 points, .61%.  Economy and Finance are systemically wrong. . .  or is this the stock market’s exhaustion top?

An exhaustion gap is a technical signal marked by a break lower in prices, usually on a daily chart, that occurs after a bull  market. This signal reflects a significant shift from buying to selling activity that usually coincides with falling demand for stocks.  The implication of the signal is that an upward trend may be about to end soon.

 

  • This technical signal marks the potential change from upward trend to downward trend.
  • The signal has three main characteristics including increased volume and a downward price break.
  • Exhaustion gaps imply that buyers are used up or exhausted and don’t have enough orders to overwhelm the significant number of new sellers that seem to have entered into the market.

 

The principle behind an exhaustion gap is that the number of likely buyers has diminished and sellers have aggressively stepped into the market. The buyers may be largely exhausted implying that the upward trend is likely about to stop.

 

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