Dow @ New Intraday High for 7/12...
- Thread starter MattF
- Start date
Nope, not going to happen. It looks like it will fall off the cliff soon.
http://stockcharts.com/charts/gallery.html?$INDU
http://stockcharts.com/charts/gallery.html?$INDU
Lets look at this logically and talk about this in an intelligent manner rather then resorting to anecdotes, slogans and other trivia that has nothing to do with anything ...
The vast majority of technicians do not declare a breakout to a new high until there is at least a 3% break over the old ones which would be right around 14000. The reason for this is so you dont get yourself into a bull-trap.
I look at the chart and see the $INDU as chopping around the last month and in need of a direction. This formation looks like a topping pattern that we have seen before.
Then lets look at the fundamentals. The main fundamental that gives the $INDU strength is the $XEU. If you believe the $XEU will go higher from here then the $INDU has further chance of breaking out. The $XEU is at an all-time high and appears to be at the right peak of a large cup with the previous high set somewhere in 2005 if I remember correctly.
When the $XEU does start to retreat, then this will cause a market-wide panic. There have been many foreign buyers of real estate and other such investment vehicles who bet on the dollar to decline further. Any retreat in the $XEU will cause panic selloffs in these vehicles and vibrations throughout the economy. Foreign investors have bet on the dollar declining further which may happen, but what happens when it either strengthens or undergoes intervention by the Reserve? The result is stop-losses going off in the above investment vehicles and economic chaos followed by a swift and immediate correction in all markets.
Will they, the Federal Reserve, let the Euro go to $1.74 without intervention? One of the basic duties of the Federal Reserve is to protect the dollar. They havent protected it yet, but its just a matter of time when the $XEU gets to an obscene level where there is no choice but intervention.
Now lets hear your logic...
The vast majority of technicians do not declare a breakout to a new high until there is at least a 3% break over the old ones which would be right around 14000. The reason for this is so you dont get yourself into a bull-trap.
I look at the chart and see the $INDU as chopping around the last month and in need of a direction. This formation looks like a topping pattern that we have seen before.
Then lets look at the fundamentals. The main fundamental that gives the $INDU strength is the $XEU. If you believe the $XEU will go higher from here then the $INDU has further chance of breaking out. The $XEU is at an all-time high and appears to be at the right peak of a large cup with the previous high set somewhere in 2005 if I remember correctly.
When the $XEU does start to retreat, then this will cause a market-wide panic. There have been many foreign buyers of real estate and other such investment vehicles who bet on the dollar to decline further. Any retreat in the $XEU will cause panic selloffs in these vehicles and vibrations throughout the economy. Foreign investors have bet on the dollar declining further which may happen, but what happens when it either strengthens or undergoes intervention by the Reserve? The result is stop-losses going off in the above investment vehicles and economic chaos followed by a swift and immediate correction in all markets.
Will they, the Federal Reserve, let the Euro go to $1.74 without intervention? One of the basic duties of the Federal Reserve is to protect the dollar. They havent protected it yet, but its just a matter of time when the $XEU gets to an obscene level where there is no choice but intervention.
Now lets hear your logic...
I've posted this theory previously in other threads. We are at a point in time right now where growth is trumping value. Since 2001, value has ruled the street and you can see this when you chart out the Russell value series of indexes on www.prophet.net using all data charts.
In 1996, there was a similiar switch over from value to growth stocks. What happened is value stocks chopped and went down from 96 to March 2000. The Russell Value 2000 increased 2.5 times from 2000 to the present time where as the Russell Growth 2000 made a huge bowl-like formation.
I wouldnt focus myself on the DOW or the SPX right now. I would focus on the NDX and other growth plays. How high can these growth plays go? Very high. How high can the $NDX go? 3000 I believe.
In 1996, there was a similiar switch over from value to growth stocks. What happened is value stocks chopped and went down from 96 to March 2000. The Russell Value 2000 increased 2.5 times from 2000 to the present time where as the Russell Growth 2000 made a huge bowl-like formation.
I wouldnt focus myself on the DOW or the SPX right now. I would focus on the NDX and other growth plays. How high can these growth plays go? Very high. How high can the $NDX go? 3000 I believe.
Yes, the indexes have been chopping around.
However, while you have continued to point out that this APPEARS to be a "topping" pattern . . . you have conveniently failed to address the potential for this to merely be a "consolidation" of the recent market's gains, with the ensuing outcome being yet another advance to the upside.
The bottomline is that the market will TELL US what it wants to do. All one has to do is listen.
But for some people, they get far too caught up in their ego rather than looking at the market in a CLEAR and accurate fashion.
If this current upmove consolidates at some point and retraces far too much than it should, with trading occuring back below key technical levels, then the rally since March will be over. But until then, the trend has been your friend. So has a basic understanding of what constitutes "topping" vs "consolidation" patterns.
