DOW JONES 15 year cheat-sheet that can make you rich!Dow Jones (DJI) is extending what seems a relentless rally since the August 05 Low, which was the most recent short-term correction, but in reality the index has been rallying very aggressively since the October 23 2023 Low.
That was when after a 3-month correction, it found Support above the 1W MA200 (orange trend-line) and 2 weeks later it reclaimed the 1W MA50 (blue trend-line), which has been supporting ever since. So basically the index has been on a 1W MA50 Support for 1 whole year!
What's more striking however and what short-term traders/ investors tend to ignore are the long-term Cycles of a financial asset. And Dow being one, is no exception. As mentioned, the 1W MA200 supported the October 23 2023 Low and in effect has been holding since October 10 2022 (so for 2 full years!), two weeks after the Inflation Crisis bottom. Since then we have been inside a Bull Phase.
This is part of a greater trading Cycle for Dow, one that started 1 year after the March 2009 market bottom of the historic Housing Crisis. As you can see, the pattern is recurring and the phases have a high symmetry and frequency among them.
First and foremost, they tend to do two Lows within a 1 year span, which is essentially the Bear Phase, which finds Support on the 1W MA200 (exception was of course the Black Swan of the COVID flash crash but it is of course a non-technical irregularity event) and then rebounds, effectively starting the Bull Phase.
The first 2 Bull Phases rose by +75.80%, while the most recent by +70.80%, so we are roughly around the same strength levels. Also as far as duration is concerned, the 1st Bull Phase lasted for 1239 days (177 weeks), the 2nd for 1134 days (162 weeks) and the 3rd for 1106 days (158 weeks). Again the time element is quite similar. Notice also the similar pattern that the 1W MACD prints every time Dow enters the final part of the Bull Phase.
As a result, if we apply those dynamic conditions on the current Bull Phase, we can see that a minimum rise of +70.80% from the bottom, should peak a little over 48000, and if it last a minimum of 1106 days (158 weeks) it should come to an end and price the top by October 06 2025.
This indicates that we have at least another full year of bullish trend ahead of us and a fair Target could be 48000.
As you realize, investors who are methodically following this 15 year old cheat-sheet, know where and when to buy/ sell and that achieves investing's two main principles: Profit Maximization and Risk Management. Patience and proper management within such Cycles are what "can make you rich" indeed.
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