Expecting windfall returns after another 2% down on DJI
As I analyze the charts of DJI and S&P300, a compelling narrative emerges. To establish a higher low, DJI needs to revisit its support level, approximately 2% lower from current levels, before the end of this month.
To gain more confidence in the overall market structure, I constructed an S&P300 index by selecting the top 300 volatile stocks from the S&P500, excluding the top 10 largest market capitalization stocks to minimize data skew.
The chart below displays two sets of candles: DJI (divided by 400 for scaling purposes) at the bottom and S&P300 at the top. Observing the S&P300 chart on a monthly timeframe reveals a notable pattern – most candles bottom out approximately 2% above their previous month's low.
Currently, the S&P300 price is still 4% above its previous month's low, indicating another 2% downturn is likely. Given the strong correlation between DJI and S&P300, it's reasonable to assume DJI will follow a similar path.
With this insight, traders can confidently prepare for potential trading opportunities, leveraging the anticipated 2% drop to their advantage.
# Key Takeaways:
- DJI needs to revisit its support level, approximately 2% lower from current levels, before the end of this month.
- S&P300 is likely to experience another 2% downturn based on its monthly chart pattern.
- Strong correlation between DJI and S&P300 suggests a similar price movement.
# Trading Strategy:
- Prepare to take trades at the anticipated support level, leveraging the expected 2% drop.
- Monitor the S&P300 chart for confirmation of the 2% downturn.
- Adjust trading strategies accordingly to optimize returns while minimizing risk.
Happy trading!!!
Checkout my other free indicator sangana beta table to see beta of stocks in a table all at once(works for S&P500 and Nifty 500).
Note: I am not a financial advisor. Do your own research before investing!!
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