Dow Monthly Target @ 25.800 (Check) – Tag and Reverse, Just Like in 1987?

Technical Analysis and Trading Ideas

Dow Monthly Target @ 25.800 (Check) – Tag and Reverse, Just Like in 1987?

So far, the resemblance between the vertical pattern of the DJI 1970-1987 and the current vertical pattern of the DJI is remarkable.

If this pattern keeps aligning, then it looks like the US stock markets are on its way for a rough year.

CHART 1 – Dow Jones Industrial – Monthly Chart – Target 25.800 (check)

This is one of the charts from the previous analysis of the US Markets: Dow Jones Industrial – Party Like It’s 1987 & Why That Is A Positive Thing,  in which I showed the similarity in patterns between two, 30 years apart.





Chart 2 – Fresh DJI Monthly Chart – Zoomed in on (7)

The DJI is still following a similar pattern as in 1987, reaching 2nd, (red) resistance area @ 25.800.

In 1987, the Dow briefly ripped above red resistance and then dropped below black support in the next candle.

That could lead to the idea that FEB 2018 = SEP 1987 –> – 8% intra month, – 4% close. The so called Dead Cat Bounce before the real fun for bears begin.

For the short term, I’m very bearish on stocks. So I hedge most of my equity exposure by using short positions at eToro and I bought several put spreads on the Dutch stock market index (AEX).  It’s not rewarding yet, in fact, it’s costing me 3.4% total return so far (10% weight in this strategy and a -34% performance = -3.4% contribution to the total portfolio).

Obviously, a negative contribution is not something I like to see, but it’s also not that worrisome (yet). I do realize, that if it does break down to the downside over the next couple of months, then this strategy will pay out, big time, and might even add more than 20% to my total portfolio.

Keep an eye on the 24.800 – 25.000 support area (black trend line FEB 2018).

Trading below poses an imminent risk of a market crash to 20.000. 





DJI Monthly Chart – Main Idea: 1970-2000 = 2000 – 2030

Long term, I will add to stocks when they are 20% to 40% cheaper, for ultimately a Dow of $100.000 in the year 2032, peak of the flight to private assets according to Armstrong.




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Total Portfolio Strategy 2018

If you want to read more about my Total Investment Strategy, then please read this update first: 2017 Performance and Total Portfolio. 

Or read my latest update on the US Markets: Dow Jones Industrial, Party Like It’s 1987! 

This is what I will do over the next couple of weeks/months:



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