DOW Plunges, Trend Is Still Higher

At the moment I am writing this article the Dow Jones Industrial Average is down over 340 points however, unless we close below the trend as demonstrated on the chart below I am still expecting this market to move higher.

Below is ticker (NYSEARCA:DIA) which shows the current symmetrical triangle still in play as we have, (as of yet), not broken the lower trendline.

For a comparison of the price action over the past few days, have a look at this chart below. This is also of ticker (DIA) on the 23rd of this month.

Until we close solidly below this lower line, I still believe this market is moving higher.

I will write an update to this article as this plays out.

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The Bond Market Is Telling Us To Buy Stocks Now

The signs are everywhere if you just know where to look, and the bond market is sending us a big tell.

If you follow my work at all, then you know I always say “watch the bond market” for tells as to where stocks may be going. People invariably look to the stock market itself for signs as to where it may be going, and this also invariably leads to often very wrong signals.

As a trader you need to watch the movement of cash throughout these markets, and it looks to me that an exodus of cash from the bond market is about to occur and where will it go? Into stocks.

Despite this stock market being ridiculously overvalued by historical norms, in the short run this market is going higher based upon central bank management/support.

Have a look at the chart below, ticker (NYSEARCA:BND).

It looks to me that this trade (above) is getting old, and if this plays out as I believe we are going to see cash move into stocks and soon.

We will also likely see cash move out of other “safe” assets and into risk as well, (see my last two articles).

As individuals who are seeking to capitalize on all this well, I hope that I am making this simple.

Why The DOW May Reach New All Time Record Highs Very Soon.

If you are familiar with my work as of late, especially in light of the current situation involving world central banks who appear to be determined to create a “risk on” environment for traders, I have been saying this market IS going higher.

Lets look at a chart.

Below is the price action of SPDR Dow Jones Industrial Average ETF (NYSEARCA:DIA) for the last year.

If you observe the red pattern (circled in black), it appears that a clear symmetrical triangle is forming.

The current (deliberate) “risk on” environment being supported by the world central banks makes me believe a breakout to the upside is likely.

Is it possible that a breakout to the downside could also occur as demonstrated by the following?

Sure it is, but again the game now in my opinion is “risk on.”

If you are interested, click the following link to see what Investopedia has to say about a Symmetrical Triangle like the one I outlined for you on the chart of (DIA).

What’s your take?

SLV May Be About To Fall. Capitalize On It!

Despite a roaring US dollar as of late, we have seen the price action of (NYSEARCA:GLD) and (NYSEARCA:SLV) rise along with it.

But this may be about to change.

Below is a 1yr chart of ticker (SLV).

Take notice of the recent price action which has gone up nearly parabolic since the beginning of the year. Now when I see price action like this, I begin to think about a reversal with regard to the current trend.

If you take a closer look at this chart you will notice the area I circled in purple. This upward momentum just hit it’s 200 day MA, (red line), and I believe this may act as resistance.

With this knowledge now may be the time to take advantage of a pullback which could pay off nicely.

History Is Made As ECB Begins Full On QE: Enter A New Phase Of Currency Wars

In a very desperate move the ECB joined the ranks of the BOJ, the Federal Reserve, and the BOE in full on quantitative easing as they too become a lender of last resort.

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Of course this will not work, as you cannot fix any debt problem by adding monumentally more debt onto the issue which is debt itself.

This move by the ECB has now pushed the Euro to a multi-year low, and the global currency wars have now entered a new phase.

Any talks of the Federal Reserve raising rates anytime soon should now be met with laughter. We can now rest assured that the Federal Reserve will not be raising rates, but will soon begin to print more cash out of thin air than ever before to “compete” in this new phase of the war on currencies from within.

Bonds May Be Telling Of A Major Stock Market Rally

The global economic situation is grave, but that will not stop the US stock market from a major move higher.

The situation is critical, and the world central banks have gotten so desperate to keep the global economy afloat that not only are they continuing to slash rates, they are going negative.

Quite simply the world central banks are not allowing natural market cycles to play out, and are instead continuing to hyper-stimulate a global economy on life support. With this now central bank managed market, we can expect the world to continue to be flooded with debt in the form of printed out of thin air currencies which will be then used to buy IOU’s (bonds) in an effort to push off the unavoidable cataclysmic meltdown of the world financial system.

Understand all this MUST BALANCE OUT at one point, and in my professional opinion we are dangerously close.

Understanding that the world central banks including the Federal Reserve, (who is already performing a backdoor QE program which never ended), are going to engage in money printing and debt creation unlike anything seen yet, allows us to understand that this market is poised to move higher.

Have a look at the chart below of ticker (NYSEARCA:BND), Vanguard Total Bond Fund.

It appears to be on the cusp of a major sell-off with regard to bonds, and just like the time before this market could make a big move higher.

What’s your take?

Has the Energy Sector Bottomed?

It is certainly no secret that the energy sector of this market has taken quite a punishing with the continued pressure on crude. So the question is, are we about to see a reversal?

Have a look at the chart below with regard to (NYSEARCA:XLE) the energy sector exchange traded fund.

It appears that we have established a double bottom support which may indicate a move higher.

This is technically important because markets always tend to “over react,” and in my professional opinion this time is no different. What this says to me as a trader is now may be the time to be buying the energy sector.