I don’t look at the DJIA very often, as I consider it ridiculously corrupted and manipulated [see: Update on DJIA Nov 2016.] But, once in a while, I’m reminded of how it matters. This is one of those times.
On Feb 9, when SPX and ES were tagging their SMA200s, DJIA dropped only to 23,360, about 566 points (2.5%) away from its SMA200. Thus, it was robbed of the opportunity to backtest important support. Because stocks have been going sideways for the past two months, it finally got its chance yesterday — tagging the moving average in its plunge to 23,344. It was a slightly lower low than in February, meaning that DJI has technically completed what many would consider a normal corrective wave (ES and SPX have not.)
Given that DJI latches on to any and every support it can find, what are the chances that it won’t bounce here?
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