markrivest
Long

Long Term DJI and RSI Evidence

DJ:DJI   Dow Jones Industrial Average Index
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In several of my posts I've noted that stocks and stock indices almost always have a bearish RSI divergence at the completion of their bull moves.
I've discovered that this phenomenon is present at all time levels from monthly all the way down to the one minute scale.
The monthly DJI is a perfect example of using the RSI to discover tops.
Every significant peak from 1929 to 2007 has had either a cyclical and/or secular RSI bearish divergence.

A cyclical divergence is usually about one to two years.
A secular divergence covers several years.

Does this phenomenon work 100% of the time? No, about 10% to 15% of the time a peak will be made with out a bearish divergence.
The DJI January 2018 could be the peak of the bull market that began in 2009. However, as traders we must go with the greater probability.

The monthly DJI with a confirmed RSI peak is one of the main reasons why I've been anticipating the DJI to exceed its January 2018.
On 8/17/18 the DJI was only 3.6% from its all-time high. In a prior post I noted a long term time cycle indicating a major US stock market peak could be made in August 2018.

If the DJI makes a new all-time high in August 2018 with a monthly bearish RSI divergence, there's a very high probability a significant peak could be made.

Mark



Thanks, Mark. Still waiting for the peak formation
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markrivest johnkeii
@johnkeii,
For the DJI it could come in 2 weeks.

Mark
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Fascinating- very helpful - thanks for this insight! With ten session days left to trade in August we will find out real soon!

BTW looking at this chart notice that RSI made H&S in '07 before the big break- keep a close eye on it now!
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Divergences are extremely important.
The longer term multi year divergences shown, especially illuminate that importance.

One can clearly see how elevated, and stretched the current DOW is.
The longer this takes to play out and peak, the more dangerous it becomes.

This is excellent. Thank you.

THE_UNWIND

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markrivest The_Unwind
Hi @The_Unwind,

Thanks for the comment. Your recent long term DJI post inspired me to do this long term DJI and RSI post.

Mark
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