Source: http://scottpluschau.blogspot.com/2013/03/signs-of-rampant-dow-jones-industrial.html
On February 25th, 2013 the daily price range was between 13,746-14,064. That range engulfed the prior 20 trading days. (I have to give credit where credit is due and I saw that noted in an article from D.R. Barton, Jr.) A 20 day outside bar is unprecedented according to Mr. Barton, Jr.
I have this highlighted in a blue rectangle on the Dow Jones Industrial Average futures chart below.
(Click on chart to expand)
What this tells me, is that the Equity market is out of control with wild and rampant speculation. Volume is now increasing dramatically and with the market in a range near the top it is "Churning" and a sign of "Distribution". Historically speaking this is a sign of a market top.
Any increase in volume is healthy in the Bull Market "when" the market is making new swing highs, or breaking out of consolidation patterns and into trend. Seeing low volume on the reactions and throwbacks is also healthy. This is far from the case in the US Major Equity Markets this year.
One other look at the near term chart shows an Expanding or Inverted Triangle pattern, left hand side below 30 minute chart. Similar to the Daily chart, right hand side below. Should the Dow Jones lose support again at approximately 13,700 I would not be surprised that the top was in for the market for at least the intermediate term. Any confirmation of a change in trend from that point on and the likelihood of a Bear Market being born begins.
I have been cautious trading due to the bearish negative divergence in major Commodities compared to Equities, and the Price Volume divergence in Equities. There is relative weakness in many assets compared to the S&P 500, and those risk assets with relative weakness are likely to get pounded when the global "Risk Off" environment returns. Are you prepared for all scenarios good and bad?
When there is carnage in financial markets there is opportunity. Opportunity to short and make profit, and opportunity to scoop up the bargains that show relative strength. Recognizing Bullish Bottoming or Bullish Reversal patterns early and after a "Washout" will be extremely important. When bullish confirmation comes with these patterns it brings opportunity to add to a position for what will initially be seen as just a dead cat bounce, then just a short squeeze, but in many cases I believe it will be a new bull market trend beginning in the "Hard Assets".
New Subscribers seem to be excited about the new model portfolio, and I am just as excited to bring the service to you. Stay in tune with the chart patterns with one of the premium services here.
Tomorrow is the first weekend update in the Long Term Investing Hard Asset model portfolio, there is still time to join.
After this weekend the model portfolio services will be closed to new subscribers until at least April 1st.
Here is a link to a current list of some Exchange Traded Funds or Notes that might be used to invest. Some foreign Currency ETF's have been eliminated since they no longer trade. Futures will be used in the analysis but all investing will be done in ETF's, ETN's. http://scottpluschau.blogspot.com/p/hard-asset-model-portfolio.html
Email for interest ScottPluschau@gmail.com
