This is a weekly chart for Dow Futures. Given the hysteria today, I started looking at where there MIGHT be TECHNICAL SUPPORT. Food for thought if you are 1) short and looking for a down side recovery point, or 2) looking to step in and buy on a “dip”. Remember, with the Dow at 17000, percentage points are much more important than raw numbers.
The talking heads on TV like big numbers but decline to talk about the percentages. 300 points with the Dow at 6,500 (back in 2009) is MUCH MUCH MORE SIGNIFICANT THAN WITH 300 POINTS AT DOW 17000.
Also 1) we are heading into August typically the vacation months for the money class and also 90 percent of Europe.
Taking profits after a huge rally up so far after 7 months is not to be that un expected, is it?
The high 2 weeks ago in the Dow futures was 17 085. Today’s low 16 506. or 580 pts. That 3.3% off the highs.
Basic math says that 16230 would be 5% off the top. That is roughly where the trend line comes into play.
REMEMBER, 10 DAYS AGO, THE SAME PEOPLE ON TV WERE DANCING THE DOW 20k DANCE. NOW THEY ARE READY TO TIE A HANG MAN’S NOOSE AND STEP OFF THE STOOL.
If you learn anything from reading my letter:. For god sake, take what you see on TV with a grain of salt.
Their job is to take something kind of boring and mundane and make it sexy and exciting.
As always, keep your bets small, and your stops tight.
A good idea is only good if you make $ . Otherwise, its just a load of opinion.
CER