DOW will drop to 25,000 by End of Year
A simple chart here folks.
Obviously, most of you technical traders are probably already aware of this ominous ascending wedge that the market has been working on and working inside since March of 2020, the apex of 'Rona lockdown fears.
Since that time the Fed has really done absolutely nothing to help the U.S. dollar. Now, this was a known campaign message under Trump. Republican candidates tend to raise taxes secretly under the guise of inflation, and Democrats a generally more forthcoming in their taxing endeavors, making the American people aware of their initiatives by raising taxes. When the economy suffers most from our political administrations' actions, both taxes and interest rates are simultaneously raised. So far, under the Biden administration, this has not yet occurred. "YET" is the keyword here.
Typically, the most politically diplomatic action any leader can take if they are being encouraged to do both is to first raise capital via new taxes (or orders that necessitate new taxes), and then, once these have been signed into law the Fed can begin to work on their end raising basis points. The dollar is usually strengthened by the latter action, depending upon what it is being juxtaposed against.
Lately, the dollar has been spiraling downward, at times, sinking to new lows monthly.
Tremendous pressure is being placed on Powell and the Fed to take action. However, to this point, the Fed has done nothing.
I believe that if we combine a bit of simple technical data with historical precedence and political strategy, we should be able to reasonably deduce what the future may hold for our fragile (my opinion, of course) economy.
With that long preface out of the way, allow me to show you what my idea here concludes.
First, the ascending wedge. Typically, this is a bearish signal. Sometimes, it can be broken to the upside (as with S&P and the NASDAQ); however; when this occurs, it will most often come back down to touch the top of the wedge. Previous resistance now becomes support. Many times this support is broken and the bearish indication of the rising wedge still comes to fruition. I believe this will be the case. Technical analysis historically supports this probability.
Additionally, on the technical side, we have a small Head & Shoulders pattern playing out on the 4-hour chart. The neckline is in RED. We could move between the RED (neckline support) and BLACK (overhead resistance and topline of the ascending wedge) through the middle of May before we finally collapse down and fulfill this pattern, at which point, I believe the domino effect may begin as the fundamental logic and political strategy of what I have mentioned above will begin to be initiated by the Biden admin and the Fed.
By mid-May Biden will have signed into order most of the most impactful (economically speaking) actions. The Fed, under his admin, has been patient. They have been able to make it this far without taking action. But the dollar is being absolutely demolished while they have been sitting on their hands. There is tremendous pressure to take action. Enter June.
On June 15-16 (tentatively scheduled) the Fed will meet again. It is at this point that I believe they will be compelled to take some sort of action against the falling price of the dollar. I predict that they will start with a small basis point hike. It may only be 25 basis points at first. But this will be enough to trigger the domino effect. It will strengthen the dollar just enough to cause the market to stall. However, I don't believe the Fed will stop there. I believe from June through the rest of 2021, Powell and the Fed will continue to increase interest rates. By the time the year ends, the combined sum of all interest rate hikes could be as much as 175 basis points! I know this sounds far-fetched, but I am not alone in this theory. Someone is betting $90 million if it doesn't happen. I will post the article in the comments as I don't want to be flagged by TV for it. The last time I posted outside material, my post was hidden.
Please let me know in the comments if you agree or disagree with my current market sentiment.
Happy trading friends.
Obviously, most of you technical traders are probably already aware of this ominous ascending wedge that the market has been working on and working inside since March of 2020, the apex of 'Rona lockdown fears.
Since that time the Fed has really done absolutely nothing to help the U.S. dollar. Now, this was a known campaign message under Trump. Republican candidates tend to raise taxes secretly under the guise of inflation, and Democrats a generally more forthcoming in their taxing endeavors, making the American people aware of their initiatives by raising taxes. When the economy suffers most from our political administrations' actions, both taxes and interest rates are simultaneously raised. So far, under the Biden administration, this has not yet occurred. "YET" is the keyword here.
Typically, the most politically diplomatic action any leader can take if they are being encouraged to do both is to first raise capital via new taxes (or orders that necessitate new taxes), and then, once these have been signed into law the Fed can begin to work on their end raising basis points. The dollar is usually strengthened by the latter action, depending upon what it is being juxtaposed against.
Lately, the dollar has been spiraling downward, at times, sinking to new lows monthly.
Tremendous pressure is being placed on Powell and the Fed to take action. However, to this point, the Fed has done nothing.
I believe that if we combine a bit of simple technical data with historical precedence and political strategy, we should be able to reasonably deduce what the future may hold for our fragile (my opinion, of course) economy.
With that long preface out of the way, allow me to show you what my idea here concludes.
First, the ascending wedge. Typically, this is a bearish signal. Sometimes, it can be broken to the upside (as with S&P and the NASDAQ); however; when this occurs, it will most often come back down to touch the top of the wedge. Previous resistance now becomes support. Many times this support is broken and the bearish indication of the rising wedge still comes to fruition. I believe this will be the case. Technical analysis historically supports this probability.
Additionally, on the technical side, we have a small Head & Shoulders pattern playing out on the 4-hour chart. The neckline is in RED. We could move between the RED (neckline support) and BLACK (overhead resistance and topline of the ascending wedge) through the middle of May before we finally collapse down and fulfill this pattern, at which point, I believe the domino effect may begin as the fundamental logic and political strategy of what I have mentioned above will begin to be initiated by the Biden admin and the Fed.
By mid-May Biden will have signed into order most of the most impactful (economically speaking) actions. The Fed, under his admin, has been patient. They have been able to make it this far without taking action. But the dollar is being absolutely demolished while they have been sitting on their hands. There is tremendous pressure to take action. Enter June.
On June 15-16 (tentatively scheduled) the Fed will meet again. It is at this point that I believe they will be compelled to take some sort of action against the falling price of the dollar. I predict that they will start with a small basis point hike. It may only be 25 basis points at first. But this will be enough to trigger the domino effect. It will strengthen the dollar just enough to cause the market to stall. However, I don't believe the Fed will stop there. I believe from June through the rest of 2021, Powell and the Fed will continue to increase interest rates. By the time the year ends, the combined sum of all interest rate hikes could be as much as 175 basis points! I know this sounds far-fetched, but I am not alone in this theory. Someone is betting $90 million if it doesn't happen. I will post the article in the comments as I don't want to be flagged by TV for it. The last time I posted outside material, my post was hidden.
Please let me know in the comments if you agree or disagree with my current market sentiment.
Happy trading friends.
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Prophesying the price action of markets one chart at a time.
Crypto predictions, targets, how-tos, and much, much more!
Never miss a prophecy. Sign up for my free newsletter at:
stewdam.us
