Monday, November 4, 2019
INDU Dow Jones Industrials Daily Chart; Dow On Verge of New All-Time Highs
The SPX (the S&P 500; the stock market), COMPQ (Nasdaq), NDX (Nasdaq 100), SOX (semiconductors) and other indexes are at all-time record highs. The RUT small caps lag and are not at record highs. Neither is the Dow (INDU or DJI) or the NYA (NYSE Composite). Thus, bulls win big if they can create new all-time record highs in the Dow Jones Industrials, NYSE Comp and Russell 2000. Bears win big if they can create negativity and weakness in the S&P 500, Nasdaq, Nazzy 100 and chip sector.
The Dow is on the verge of a breakout. The green circle shows the all-time record high at 27398.68 on 7/16/19 and the all-time record closing high at 27359.16 on 7/15/19. On Friday, the Dow prints a HOD at 27347, same as the closing price, where Monday begins. The stock market closed at the highs on Friday due to the rampant euphoria and complacency.
So if you see Dow 27400, 27-4-hundo, the bulls will cheer and celebrate the power of the Fed and other global central bankers; their non-stop 11 years of financial power is amazing. Only 53 points of upside is needed and the Dow futures are up +104 points 5 hours before the opening bell for the US Monday trading session. The new record high in the Dow looks like a done deal unless something negative happens over the next few hours.
US Commerce Secretary Ross, speaking to Bloomberg overnight, is waxing optimistically about a US-China trade deal creating the lift in the futures. The bulls are salivating at the blue ascending triangle which points to humongous upside gains above 27.4K. Note the triple-top in play. Keystone mentioned this ole Wall Street adage in a prior post that says, "There is no such thing as a triple-top." The presumption is that the bulls always rally on the third hump nullifying the triple-top. In reality, Keystone says its a 50-50 proposition. Half the time the triple-top will hold and spank price lower and the other half of the time price will breakout higher and the triple-top will be nullified.
The chart is in negative divergence over the multi-month period. The stochastics are overbot agreeable to a pullback. The upside trading volume is not impressive. The ADX crumbles down to 12 so the price move higher, albeit sharp and fast, is NOT a strong trend higher. The Aroon green line is pegged at one hundo with nowhere to go but down. The Aroon red line is low, in oversold territory, which is also bearish over time since it will want to move higher. All these parameters are negative.
The bulls have the potential excitement of a breakout and new all-time highs in their favor. Also the ascending triangle pattern. Also the little bit of near-term mojo with the RSI and MACD line. This may create enough juice to keep the index elevated for a couple more days, but the longer-term neggie d is hanging over the Dow's head like the Sword of Damocles ready to smack it silly at any time.
Price is a whisker from the upper standard deviation band at 27410 so this should be tapped at the opening bell and thus open the door to a retracement to the middle band, the 20-day MA, at 26843, and rising.
The low put/call ratios indicate a stock market top at hand any minute, any hour, any day ahead and a significant drop to follow. Veterans Day is next Monday and the bond market will be closed but the stock market will be open. Stocks tend to be bullish the two days preceding a three-day holiday weekend, although stocks will trade on Monday, which may create some lift on Thursday and Friday. OpEx is next week so a low on Tuesday, 11/12 should lead to a high on Wednesday, 11/13. The full moon peaks on Tuesday, 11/12, at 8:34 AM EST and stocks are typically bullish through the full moon.
Thus, the bulls have seasonality-style factors in their favor from Thursday, 11/7, through Wednesday, 11/13, which hints that if the stock market tops out and begins dipping it is probably more likely for this to occur early this week or by mid-week.
Hey, look at Freddy. He's back from the screen printer's with the Dow 27,400 hats. He is passing out a free hat with a shot of Fed booze. Natalie has a bag of confetti she plans to toss from the NYSE balcony at the opening bell as the Dow crosses above 27.4K. Traders are euphorically optimistic ready to see more upside numbers in stocks thanks to the dovish Fed and happy trade deal talk. The cab driver and shoeshine boy both placed their life savings in the stock market saying they do not want to miss this fantastic money train leaving the station. Traders and investors are singin' songs and carryin' on ready to cheer the opening bell. Happy days are truly here again. Whoopie. Wheeeee. What do you think?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.