Dow Jones Industrial Average Archives - Page 2 of 14

May 18, 2017

Trump Turmoil

Discussion of a possible impeachment action against President Donald Trump is rife in the media and seems to have spooked financial markets.

The Dollar Index fell through support at 98.50, signaling another decline. The long-term target is 93.00.

Dollar Index

Gold rallied, breaking through resistance at $1250/ounce. Follow-through above $1300 would signal another advance, with a target of the 2016 high at $1375.

Spot Gold

Dow Jones Industrial Average retreated from resistance at 21000. Expect a test of medium-term support at 20400. Reversal below 20000 would be cause for concern.

Dow Jones Industrial Average

The S&P 500 is headed for a test of medium-term support at 2320. Breach would likewise signal a strong correction.

S&P 500

We are likely to get a secondary correction but I expect the bull market to continue. Impeachment of Trump would be a temporary setback and would make me more bullish on the long-term outlook.

It’s probably better to have him inside the tent pissing out,
than outside the tent pissing in.

~ President Lyndon Johnson on FBI Director J. Edgar Hoover whom he mistrusted

May 5, 2017

Nasdaq buying pressure

The Nasdaq 100 continues its impressive climb, shown here on a monthly chart. Rising troughs on Twiggs Money Flow signal strong buying pressure and a test of 6000 is likely.

Nasdaq 100

Dow Jones Industrial Average continues to test resistance at 21000 after a shallow correction. Elevated troughs on Twiggs Money Flow again signal buying pressure. Breakout is likely and would signal a fresh advance, with an immediate target of 22000.

Dow Jones Industrial Average

April 28, 2017

Dow prepares for a fresh advance

Dow Jones Industrial Average is testing resistance at 21000 after a shallow correction. Rising troughs above zero on Twiggs Money Flow signal strong buying pressure. Breakout is likely and would signal a fresh advance, with an immediate target of 22000.

Dow Jones Industrial Average

Small Cap stocks are also advancing, with the Russell 2000 Index testing resistance at 14.00. Breakout is likely and would offer an immediate target of 15.00.

Russell 2000 Small Caps

A broad advance across large and small caps, suggests low market risk. Advance of only large caps would indicate that investors are risk averse. Advance of only small caps normally occurs towards the frothy end of stage III of a bull market — when the smart money is taking profits while the dumb money has lost all fear.

April 7, 2017

Dow consolidation

Dow Jones Industrial Average is consolidating in a narrow band between 20400 and 20800. Narrow bands in an up-trend signal accumulation and breakout above 20800 would signal another advance.

Dow Jones Industrial Average

Declining 21-day Twiggs money Flow is typical of a consolidation, provided it respects the zero line. A trough above zero confirms medium-term buying pressure.

April 1, 2017

Dow Descending Wedge

Dow Jones Industrial Average displays a descending broadening wedge on the daily chart. Thomas Bulkowski describes this as a “mid list performer ….found most often with upward breakouts in a bull market. Downward breakouts are quite rare.”

Dow Jones Industrial Average

The correction seems mild and lacks urgency from sellers. It is very likely to end with an upward breakout, above the wedge at 20800, signaling another advance. Watch for a failed down-swing within the wedge pattern. According to empirical testing done by Bulkowski, a partial decline has a high probability (87%) of resolving in an upward breakout.

Latest GDP numbers confirm that low growth of the past decade continues.

GDP & Forecast

The quick rule-of-thumb forecast — Private sector employee payroll x Average Hours Worked x Average Hourly Rate — has proved remarkably accurate and has become one of my favorite indicators.

March 24, 2017

Dow warns of a correction

The commentator’s curse. Three days after I posted that Dow Jones Industrial Average was consolidating in a bullish narrow band below resistance at 21000, the Dow breached support at 20800. Downward breakout warns of a correction with support at 20000. Declining 21-day Twiggs Money Flow indicates medium-term selling pressure. Follow-through below 20600 would strengthen the (medium-term) bear signal but the primary trend remains up.

Dow Jones Industrial Average

The false break above 21000 was a hint that all was not well with the trend. Unfortunately we often only see what we expect and miss the subtle clues.

The Dow is in Stage III of a bull market. This is confirmed by a primary up-trend on the Transportation Average, although the current month shows a correction.

Dow Jones Transportation Average

Small Caps indexes like the Russell 2000 also display a strong up-trend, reinforcing the Stage III conclusion.

Russell 2000 Small Caps

Likewise, the Nasdaq 100.

Nasdaq 100

I have not drawn conventional trendlines, on the above charts, through the lowest points in the up-trend. Instead I have dragged a linear regression line down to “touch” the mid-point lows. I find this offers a better fit in many cases where there is an initial (bounce) spurt at the start of the trend.

March 21, 2017

Dow breaches support

The commentator’s curse. Three days after I posted that Dow Jones Industrial Average was consolidating in a bullish narrow band below resistance at 21000, the Dow breached support at 20800. Downward breakout warns of a correction. Expect support at 20000. The false break above 21000 was a hint that all was not well with the trend. Unfortunately we often only see what we expect to see and miss the subtle clues.

Dow Jones Industrial Average

The Dow is in Stage III of a bull market, with long-term Twiggs Money Flow signaling strong buying pressure. Chances of a (primary trend) reversal seem low.

[Correction: Breach of support was at 20800, not 21800.]

March 17, 2017

Dow bullish

Dow Jones Industrial Average is consolidating in a narrow band below resistance at 21000, a bullish sign. Strong buying pressure is also signaled by rising Twiggs Money Flow troughs above zero. Breakout would offer a short-term target of 22000.

Dow Jones Industrial Average

March 10, 2017

Dow: How long will stage III last?

Dow Jones Industrial Average is testing resistance at 21000. Another narrow consolidation, as in December-January, would confirm strong buying pressure already signaled by rising Twiggs Money Flow troughs above zero.

Dow Jones Industrial Average

We are witnessing stage III of a bull market. While this is the final leg, it could last several weeks or several years. My guess is that it will last until the Fed is forced to hike interest rates in 2018, to cool inflation.

March 3, 2017

Dow Jones Industrials

Dow Jones Industrial Average closed the week above 21000 for the first time. Twelve months ago the index was at 17000, an increase of 23.5 percent. Shallow retracements since then signal buying pressure, highlighted by Twiggs Money Flow troughs above zero. The latest trough, higher than zero, reflects growing enthusiasm from investors.

Dow Jones Industrial Average

Prices are rising faster than earnings in expectation of future growth. Clearly the Dow is in Phase III of a Bull Market. As I pointed out in December, this could last for several years.