Technician
Short

(Update) U.S. Stocks: In the process of placing a major top!

INDEX:DOWI   DOW Industrials
832 4 22
Update: I decided to short US equities through the Dow Jones industrial, as i mentioned in my previous analysis that breadth indicators could be warning of a major setback coming. The behavior of the internal strength of the DJI hints a possible distribution period, as since May 2013 high, every new high wasn't confirmed by a new high in the S5TH             index ( stocks above 200sma), hinting a deteriorating internals, and a potential long term Top.

I am looking for a move towards the 200-days SMA as an initial downside target around 15700, followed by the major support level at 14560-14550(this is just nearly 11 percent decline from current levels). A break and the ability to hold back above the latest major swing high at 16590 level could negate this setup. Note that the trade provides a great risk-reward ratio.

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Previous Analysis: Market Breadth:

52-week new highs:
Stocks that are breaking to new yearly highs, which is another key breadth indicator followed by market technicians, when the numbers starts to diverge failing to make new highs, while the price index continues to grind higher, this usually indicates the lack of internal strength and concerning.

Stocks above long term average:
Swings from excessive bullish and bearish sentiment have been a good contrarian market indicator for the past years. Every time the indexes of stocks above or below 200-days Average reached an extreme of 90-100 percent a correction in SP500             was close.

Instances where the index started falling, diverging away from the SP500             index (indicating internal strength is weakening) were bearish signals, as at least a hefty correction followed. The chart below Illustrates these divergences, where periods of prolonged divergence followed by a more sever downside move, while minor divergences followed less severe corrections.
My live trades here https://telegram.me/joinchat/DgsnQ0FzifLqyI2YAoMqqQ
I completely agree, just I think on a relative value basis it is better to short SP500 rather than the Dow30. (https://www.tradingview.com/x/1Rw2i9OO/)
But do you know what is the best? ... To short both :-D
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Technician TOP Kumowizard
2 years ago
Haha, we need some luck now :)
Reply
Technician TOP Technician
2 years ago
Thanks for the chart :)
Reply
BuboWaveTrader
2 years ago
Nasdaq spring rally
looks bullish ;)
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