Most charting purists hate the Dow. Not only is its price level manipulated like all the other indices, but any time it’s not performing up to par, they replace the dogs with Wall Street darlings. The data, therefore, is suspect from the start.
What really turns my stomach, however, is how this sewer rat of an index crapped all over three very solid and reliable chart patterns that should have resulted in a serious downturn in December 2013.
The megaphone, channel and Fibonacci patterns visible below all pointed to a plunge at 16,300. And, by plunge, we’re talking a reversal from the 1.272 extension at 16,300 to at least the former high at 14,198 — a 12.9% drop.
Instead, TPTB used the cover of low-volume holiday weekends to push DJI up through that significant resistance, resulting in a 12.5% gain over the next 18 months. Between what shoulda’ happened and what did, it was a 25% swing.
There was a moment on October 15, 2014 when DJI momentarily dipped back below the 1.272, but Fed President BullarD grabbed the nearest microphone and waxed enthusiastically about QE4, thus erasing any thoughts the index had of adhering to charting protocol.
The 15.75% rally over the next 7 months was pretty spectacular. The bulls seemed invincible. Then August 2015 rolled around and, suddenly, things looked dicey again:
√ back below 1.272 extension
√ back below megaphone upper bound
√ back below channel top
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