Saturday, November 29, 2014

INDU Dow Industrials Monthly Chart Overbot Rising Wedge Negative Divergence Price Extended

The central banker's stick-save the markets in mid-October. Price now ekes out higher highs but on far lower volume. The blue circles show distribution taking place with the smart money handing off shares to the dumb money. The Dow high of the month is only 25 points from the upper standard deviation band which will require another retracement to the middle band, the 20-month MA at 16152 and rising, at a minimum, as well as the lower band at 14382 and rising.

Price is extended above the 20-month MA above the 50 above the 100 above the 200 requiring a mean reversion. The negative MACD cross had locked-in a firm multi-year top but the central bankers are too powerful and the global collusion previously explained from the October low to present creates the thrust higher to new highs. The projection is that a multi-year top is at hand now, or a jog move may occur to satisfy the near-term strength in the RSI and MACD line where the Dow drops in December-January, then comes back up for the top in January-February for the multi-year top.

The collapses from rising wedges can be quite dramatic; very quick and painful if you choose to stay blindly long. The September-October pullback is child's play compared to the quick and substantial damage a collapse from a rising wedge can create. If you enjoyed the long rally higher and have substantial gains, it would be prudent to simply cash-out and take a few weeks or months off. Short-sellers can continue to bring on positions against the broad markets. Watch for the negative MACD cross to confirm the extended downside ahead that can last a few months or year or two ahead. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.

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