Dow Jones Industrial Average (.DJI) has been propelled in large part by the Federal Reserve’s rapid pivot from rate hikes to potential cuts

Dow Jones Industrial Average (.DJI) has been propelled in large part by the Federal Reserve’s rapid pivot from rate hikes to potential cuts

Dow Jones Industrial Average (.DJI) has been propelled in large part by the Federal Reserve’s rapid pivot from rate hikes to potential cuts

America’s stock market is on fire, registering its best start to a year since the dotcom bubble days of the late 1990s.

The Dow’s ascent above 27,000 has been propelled in large part by the Federal Reserve’s rapid pivot from rate hikes to potential cuts. That historic shift has made stocks look even more attractive than bonds, and raised confidence that the longest economic expansion on record will continue.

Ed Yardeni, president of investment advisory Yardeni Research, believes the Dow could zoom to 31,500 by the end of next year or even sooner.

Fed chief Jerome Powell explicitly called out trade uncertainty as the main risk to the American economy — a risk so great that the US central bank has signaled looming rate cuts.

And Trump knows this.Yardeni suggested that Trump could keep trade negotiations open and continue to alternate his message about how those talks are going.

“The more uncertainty, the better to get the Fed to lower interest rates,” Yardeni said.And then the Trump administration could declare victory in the global trade war later this year or early next, lifting stocks further.

Under that scenario, Yardeni anticipates the S&P 500 will cruise to 3,500 by the end of 2020 — or sooner.

That roughly translates to 31,500 on the Dow.”It’s all about winning a second term and playing Powell to do so,” Yardeni wrote.

Overall, the bias in prices is: Upwards.

Note: this chart shows extraordinary price action to the upside.

By the way, prices are vulnerable to a correction towards 26,399.96.

The projected upper bound is: 27,946.29.

The projected lower bound is: 26,758.20.

The projected closing price is: 27,352.24.

Candlesticks

A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 7 white candles and 3 black candles for a net of 4 white candles. During the past 50 bars, there have been 29 white candles and 21 black candles for a net of 8 white candles.

A spinning top occurred (a spinning top is a candle with a small real body). Spinning tops identify a session in which there is little price action (as defined by the difference between the open and the close). During a rally or near new highs, a spinning top can be a sign that prices are losing momentum and the bulls may be in trouble.

Momentum Indicators

Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.

Stochastic Oscillator

One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 96.3983. This is an overbought reading. However, a signal is not generated until the Oscillator crosses below 80 The last signal was a sell 5 period(s) ago.

Relative Strength Index (RSI)

The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 73.53. This is where it usually tops. The RSI usually forms tops and bottoms before the underlying security. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a sell 7 period(s) ago.

Commodity Channel Index (CCI)

The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is 144.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 100. The last signal was a sell 6 period(s) ago.

MACD

The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a buy 3 period(s) ago.

Rex Takasugi – TD Profile

DJ INDU AVERG closed down -23.529 at 27,335.631. Volume was 20% below average (neutral) and Bollinger Bands were 12% narrower than normal.

Open High Low Close Volume___
27,349.32027,398.68027,290.24027,335.631 225,998,672

Technical Outlook
Short Term: Overbought
Intermediate Term: Bullish
Long Term: Bullish

Moving Averages: 10-period     50-period     200-period
Close: 27,023.95 26,146.03 25,498.11
Volatility: 8 15 20
Volume: 212,830,624 269,634,752 318,125,856

Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.

Summary

DJ INDU AVERG is currently 7.2% above its 200-period moving average and is in an upward trend. Volatility is relatively normal as compared to the average volatility over the last 10 periods. Our volume indicators reflect volume flowing into and out of .DJI at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bullish on .DJI and have had this outlook for the last 23 periods. Our momentum oscillator is currently indicating that .DJI is currently in an overbought condition.

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