The Dow industrials are not going to crash; listen to the talking heads at your own risk
The Main factor that confirms all is well is our trend indicator. It is bullish, and so that means all market pullbacks have to be viewed as buying opportunities
Secondary indicators confirming that Dow is not going to crash
When the ratio moves to the extreme as shown above; when you see that, it is a signal to pay attention. Used with several other indicators, it could provide (advance) warning of a bottom or top. It has put in a nice higher low formation, but the ascent up was a bit too fast, so a pullback to the 2.9-3.2 ranges is warranted. This pullback will coincide with a pullback in the markets.
The Dow has a minor zone of resistance in the 17250 ranges; if it closes above this level, then it should be able to trade to the 17500-17600 ranges. At that point, the Dow should reverse course and trade down to the 16500-16700 ranges. Market Update, Oct 17th, 2015
The Dow covered too much ground over a very short period. It is now attempting to trade past 17700 again. If the Dow manages to close above this level, it will likely trade to the 17850 plus ranges before pulling back. Keep in mind that the main theme for us is to play in the direction of the trend. All along, we have been stating that panic was not warranted. When we play in the direction of the trend, even though we issue downside targets we do not fixate on them. As long as the trend is up, strong pullbacks are viewed as buying opportunities. Ideally the Dow will pullback at least to the 16500 ranges. If it happens to drop lower, view it as God sent.
It is sitting right at resistance now; the 170 ranges provide a decent zone of resistance. It needs to close above this on a weekly level. If it can achieve this, then it will set the way for a move up to the 180 and subsequently 190 plus ranges. Market Update, Oct 17th, 2015
It closed above 170 on a weekly basis and went on to test the 180 ranges. The next obstacle comes at 183.00. Failure to hold above this level will result in a test of the main trend line, which corresponds to a move down to the 169 ranges. The XBD is trading well of its highs, so this indicates that brokers, in general, are not bullish yet. Overall this means that the market has more room to run up, and this index will probably trade to the 215-220 ranges over the next several months. If the Dow pulls back as projected, this index is bound to correct too. A pullback here should be music to your ears as like the masses it’s always good when the dealers and brokers are nervous, especially when the trend is up.
Market technicians will tell you that it’s bad news when more than 50% of the SP 100 stocks are trading below the 200MA. We noticed that if the trend is up or neutral, that the opposite holds true, it is a splendid opportunity. Right now it’s slightly above the 50% mark, indicating that market internals are fairly strong. It is most likely going to dip below 50, which will coincide with the markets pulling back. In our opinion, a test of the main uptrend line at 20 would be a great time to add to your positions.
The Fed is trying to fire a shot across the Bow of this bull market by hinting about an interest rate hike in December. Our response is come on do it or stop the chatter; the fact that the Fed harps on this nonsense is totally unbecoming. There are better things to pay attention too; since when is a meaningless 0.25% rate hike such a big event. This drama should be viewed as a clear signal that this economic recovery is nothing but an illusion and that Fed is well aware of this. They will have to come out with a new stimulus plan. The markets are addicted to hot money.
Put it this way. We welcome a rate hike, for it will trigger another market selloff and as the trend will most likely be up, we will be provided with another lovely buying opportunity.