Thursday, September 6, 2018

INDU Dow Jones Industrials Monthly Chart; Overbot; Double-Top; Price Extended; Upper Band Violation; Dirty Thirty Long-Term Top Developing; Dow Theory Non-Confirmation

Now that August is in the rearview mirror and September has begun, the monthly charts can be assessed. The SPX (S&P 500), the major stock index most-closely followed by professional traders and considered synonymous with "the stock market" indicates that a long-term stock market top is in place a la October 2007. The SOX (Semiconductors Index) has also placed a significant long-term top. Ditto the trannies (TRAN; Dow Jones Transports).

INDU, or DJI (Dow Jones Industrials), is set up similarly as the SPX and SOX but the Dow has not overtaken the price high from late January. Ditto the NYA (NYSE Composite).

The COMPQ, NDX and RUT indexes are nearing their long-term tops but are not yet fully negatively-diverged due to the long and strong MACD lines. With the Labor Day holiday behind us and the last four months of the year ahead, it is a good time to review these charts and surmise how the long-term top in the stock market may play out.

The INDU, or DJI, monthly chart above displays a move higher in price creating a double-top, or M-Top, in concert with the January top and record highs. The all-time high is 26614.85 and all-time closing high is also 26614.85 with price closing at the record highs on 1/26/18. Note that all the chart indicators (RSI, MACD, histogram, stochastics and money flow) are sloping negatively but this is not negative divergence. Price must print a higher high than January for the chart indicators to negatively diverge. For now, all chart indicators, and the Dow price, are simply weak unable to overtake the January record highs. With price at 26K-ish, the stock market bulls need another 600 points to take out the January highs. 

The double-top chart pattern, or M-Top, and overbot RSI and stochastics are bearish indications. Price is also extended above its moving average ribbon requiring a mean reversion lower.

The Dow has violated the upper standard deviation band since 2016, so the middle band, also the 20-month MA, is on the table, at a minimum, at 23444 and rising. This level is 2552 palindrome points under the current price at 25996; about -10% below.

The chart signals that the long-term top (months and years) is potentially in place for the industrials. The Dirty Thirty topped out and rolled over in May 2015, a significant top that Keystone called in early 2015, but the global central bankers colluded to stop the slide in early 2016 that created the Tweezer Bottom on the chart. Of course the central bankers will always implement policies that protect the wealthy privileged class that own large stock portfolios. The central bankers perform the wealthy's bidding since they are rewarded by the investment banks for their loyalty 
with lucrative speaking engagements once they leave public office. Wall Street is a corrupt cesspool of filthy human greed and nefarious activity.

The negative divergence shown for the SPX, SOX and TRAN monthly chart indicators signal that THE long-term top is in. The chart above hints that the long-term top for the Dow Industrials is in or very near. If the Dow price was above 26615, the chart above would be in full negative divergence like the S&P 500, Semiconductor Index and Dow Jones Transports.

From a Dow Theory perspective, the new record highs in the Dow Industrials should be confirmed by new record highs in the Dow Transports, and visa versa, to prove that more record highs are ahead. The trannies print new record highs in late August as highlighted in the previous TRAN monthly chart but the Dow Jones Industrials (INDU, DJI) above have not yet overtaken their record highs from January. The industrals need another six-hundo points to overtake the prior record highs. This needs to occur to prove that the bulls can take the stock market higher. If the Dow Industrials fail to print new record highs above 26615, it is a Dow Theory non-confirmation and stocks would be expected to roll over to the downside and perhaps begin confirming in a bear pattern moving lower.

The ADX shows that the trend higher in 2014 was a very strong trend (pink box) but this petered out ahead of the May 2015 market top. The ADX shows that the Dow Industrials are currently in a strong trend higher so the ADX will need to roll over to the downside to verify that the long-term top is in. The stock market bulls are only wearing a loin cloth and the strong ADX provides them with a tiny feather for their bullish headband.

Also watch the Aroon since the green line will fall to verify that THE top is in for the Dow. These prices may not be seen again for many months even many years. If you are a young person contemplating placing money in the stock market; don't. Let that money sit on the sidelines, do not worry that it will not receive much of a return, if any. In a year or two, you will look back and realize it was a smart decision and at that time, depending on how things play out, you may have an excellent chance to enter the stock market at far lower prices. 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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