INDEX:INDU   DOW Industrials [Test]
1281 5 11
Earnings season is in full swing and the KEY EARNINGS LEVEL for the DJIA             is still being assembled, but it is falling as I calculate it because of stocks like XOM             , UTX             , MMM             and others are trading down lower than when they reported back in April.

Look at the trend of the % of stocks above their respective 50 day moving averages, which is the MMFI Index at the bottom. During each rally phase the market has had fewer and fewer stocks participating. Note the red line is declining for each peak since February. Generally this is not a good sign.

Usually the 200 day moving average is a level that many people watch and long term investors like to add to positions at this level, but it is not a guarantee that the market will hold it, since there are no guarantees in trading or investing.

Coming into Friday's opening, the KEY EARNINGS LEVEL of the DJIA             is at 18050 and I will update it over the weekend.

The last rally is basically completely retraced here and there will likely be some carryover selling into Monday as foreign markets will react to our poor activity on Friday and trade down on Monday, setting a weak tone for the opening.

If Hillary Clinton's views on changes in capital gains tax rates takes center stage, then investors will be taking money off the table and could create a short term, dramatic decline in the market like we saw in 1987 where a 40% hike in the Capital Gains tax rates the following year in 1988 (from 20% to 28%) led to a 40% drop in stock prices in the same year. Unfortunately, Hillary is looking for a hike from 15% to 40%, more than 150% increase in 1 year holding period capital gains tax rates. Let's see how the weekend press handles this.

I put a sell @ the mid point of Friday's range as an entry level - with a stop over the YE2014 level marked in green. Targeting a drop equal to the high before the 200 day moving average, swinging down by the same amount as stop loss orders trigger a quick decline.

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The KEY LEVEL for the DJIA is 17,799, which still corresponds to the high made in the last bounce in July and the current rally.
While I do not disagree Tim with the chart analysis I would say the Clinton's tax changes are bit more complex than you are outlining. It does of course depend on the period of time you are comparing. This page as a chart which shows no change of stocks less than a year or longer than 6 years - it is the in between which has the drastic changes. http://taxfoundation.org/blog/details-hillary-clinton-s-capital-gains-tax-proposal
+1 Reply
I will update the latest earnings of the DJIA elements and report the new Key Level for the DJIA.
timwest timwest
Key Earnings level went up to 17799 with the release of DIS's earnings last week.
+1 Reply
A great analysis thank you so much. May I ask if you could please comment on £-AUD? Looking at the monthly chart am I right inthinking it coudl go back to 3.00000 or will we be stopped by the 200 ma and go down again in the near future? Thank you
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