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Djt

The trend is still lower!SPX has been a wild ride... even experienced traders like myself have been getting pushed around, stopped out, and left scratching our heads trying to make sense of this market. It's times like these that it's important to remember that the "why" isn't that relevant to us from a trading perspective. Technical analysis provides unbiased, objective, and most importantly, unemotional analysis that can cut through the headlines and tweets to help us position ourselves for the next move. Of course we may end up on the wrong side, but you have to think in terms of probability. For example, if there's an 80% chance of a decline versus a 20% chance of moving higher, which would you pick? I also want to note that while most are intent on blasting Trump and the shit with China, that's not what started this mess. If we're being fair, the market is still up over 22% since his election even after the recent selloff. In fact, the catalyst that initiated the selling was actually a labor report that indicated wage inflation was picking up, which in turn may make the Federal Reserve tighten faster than the market expects. The headlines about trade wars and whatnot certainly didn't help, but they were absolutely not what started this move down, so don't be a sheep and believe the "Trump tanks markets" and "Trump doesn't care about investors" headlines... those are designed to sell news, not report facts! Anyways, rant aside, the current trend is lower, therefore rallies should be sold until there's some indication that the trend has changed. I also want to note that the market has respected the Fib levels damn-near perfectly. As such, I see major resistance at 2663 and support at 2533-2554. Given the price action, I think that support fails and we make a new low. I have downside targets at 2459, 2421, and 2366 for the next leg lower. Whether or not that's the bottom will only be known once we get there and have more data to use. Finally, I want to say that there are opportunities in a declining market, so don't think its time to sell everything and move to Utah in a bunker. However, if you're portfolio consists of only index funds and the like, I urge you to reconsider carrying such concentration risk and to use this time to rebalance your holdings and pick up some undervalued assets, as its the only way to outperform the market! Happy trading!
SP:SPXShort
by EchoAlphaBravo
Dow Transports - Monthly TrendPrior to 2014 there have been 3 instances of the monthly RSI closing above 80 going back to 1988, Each of the three instances have lead to a return to the trend line noted below. In November of 2014, the DOW transports recorded the 4th instance of a monthly RSI close above 80 coming in at 86. Recently the DOWT found support at previous resistance measured from the 1999 and 2008 tops. Should the DOWT go back below this support, I believe there is a high probability of retesting the long term trend line below. Depending on the timing, this would imply a long term target of 5500-6300 on DOWT.
DJ:DJTShort
by SMP99
2
DJIA vs. DJTA Divergence Supporting Diverging DJIA Price and RSIAs pointed out in a separate comment, the current price/indicator setup increasingly resembles that of 2000 and 2007, immediately before indices' pronounced price declines. A look at the Dow Jones Industrial Average and the Dow Jones Transportation Average confirms that pessimistic view. Beginning in mid-2007, the DJTA started to trend downwards, while the DJIA remained caught in a relatively narrow trading range over the course of 2007 until early 2008. This pattern is currently being repeated, as the DJTA finds itself in a downward trend which started in late 2014, while the DJIA has been flat over the same time period. Even more significant, in my view, is the divergence between the recent DJIA' price movement and the Relative Strength Index. It should be pointed out that the longer a divergence persists, the stronger its explanatory power - and eventually the correction it calls for. Having lasted for more than two years, the current discrepancy has persisted significantly longer than the divergence in 2007, which remained for about half a year, before indices fell by about 50%.
DJ:DJIShort
by thsumlauft
DJIA vs. DJTA Divergence Supporting Diverging DJIA Price and RSIAs pointed out in a separate comment, the current price/indicator setup increasingly resembles that of 2000 and 2007, immediately before indices' pronounced price declines. See the following chart for the parallels between 2000, 2007 and now, as previously posted: A look at the Dow Jones Industrial Average and the Dow Jones Transportation Average confirms that pessimistic view. Beginning in mid-2007, the DJTA started to trend downwards, while the DJIA remained caught in a relatively narrow trading range over the course of 2007 until early 2008. This pattern is currently being repeated, as the DJTA finds itself in a downward trend which started in late 2014, while the DJIA has been flat over the same time period. Even more signficant, in my view, is the divergence between DJIA's price movement and the RSI, which is apparent since early 2013. It is worthwhile to point out that the longer such a divergence lasts, the stronger is its explanatory power - and eventually the correction it calls for. With the current divergence between price and RSI having started more than two years ago, this is substantially longer than the roughly half year discrepancy we experienced in 2007, before prices corrected about 50%.
DJ:DJIShort
by thsumlauft