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Elliott Wave Trading

Dow Busts Through 20k Triggering Speculative Short at Stock Market New All Time High

Stock-Markets / Stock Index Trading Jan 28, 2017 - 10:42 PM GMT

By: Nadeem_Walayat

Stock-Markets

The Dow finally sprinted to above Dow 20k for the first time ever after having hugged just below 20k since first reaching the mega stock market milestone early December.


Those who follow my analysis will know that my response to the Dow virtually touching 20k was to seek to scale back on stock investments accumulated during a near 8 year relentless bull market. That factually can be termed as being one of the most hated bull markets in history. Whilst my consistent messahge for its duration right since March 2009 when thew Dow bottomed at 6,470 was that this would turn out to be one of the greatest bull markets in history which has subsquently come to pass, as each years perma-bear, perma-wrong assumptions for a imminent end to the bull market let alone for a significsnt 20%+ correction never materialised.

Neverthless in advance of the dilirious, alt-reality Trump taking office, my analysis in the Trump Reset series called for a scaling back of bull market posiitions by at least 50% -

In which respcect I could not have asked for any better than a market that stood virtually suspended at Dow 20k for the following 6 weeks allowing measured distribution to take place. And even better for the UK FTSE that actually rallied during the same period. Ideal market behjaviour for distribution purposes. However the job of distribution now complete, having realised paper profits into real profits. I find myself eager to start accumulating again, where at the top of the list are the two key mega-trends are AI and the Trump Reset as the following videos illustrate:

The Trump Reset - 2 The Putin Doctrine

And then I found mysekf Friday opening a short posiition on the Dow based on little more than a continuation of the my distribution strategy that I have engaged in for the past couple of months. I told myself I am hedging my remaining long holdings but in reality it's a gamble born out of the arrgonagce of habvign been on the RIGHT side of thre stock market for near 8 years!

I've been here before, 1987 springs to mind. So I guess I think I can walk on water and short the Dow at its bull market peak! And so its probable that I am primed to get my tarding fingers a little burnt, which is good to experience a dose of reality.

Anyway I stand here, still bullish long-term and eager to accumulate stocks in key mega-trend sectors, but skeptical for the prospects for stocks for much of 2017 and findign myself going SHORT on the Dow coming off its most recent new all time high.

Let's see what a dose of reality feels like. America too needs a much needed dose of post election reality

Ensure you are subscribed to my always free newsletter and youtube channel for forthcoming analysis and detailed trend forecasts aimed at capitalising on the Trump Reset.

By Nadeem Walayat

http://www.marketoracle.co.uk

Copyright © 2005-2017 Marketoracle.co.uk (Market Oracle Ltd). All rights reserved.

Nadeem Walayat has over 25 years experience of trading derivatives, portfolio management and analysing the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem's forward looking analysis focuses on UK inflation, economy, interest rates and housing market. He is the author of five ebook's in the The Inflation Mega-Trend and Stocks Stealth Bull Market series that can be downloaded for Free.

Housing Markets Forecast 2014-2018The Stocks Stealth Bull Market 2013 and Beyond EbookThe Stocks Stealth Bull Market Update 2011 EbookThe Interest Rate Mega-Trend EbookThe Inflation Mega-trend Ebook

Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication that presents in-depth analysis from over 1000 experienced analysts on a range of views of the probable direction of the financial markets, thus enabling our readers to arrive at an informed opinion on future market direction. http://www.marketoracle.co.uk

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors before engaging in any trading activities.

Nadeem Walayat Archive

© 2005-2016 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Comments

upwarddog
30 Jan 17, 15:51
Reset implications for US Housing

Nadeem, you've been spot on for years so this short position caught my attention in a big way. How do you feel such a correction will affect US housing overall? I believe you were working on a US housing series update? Many thanks.


despe906
30 Jan 17, 16:19
Nadeem the Invincible

The market refuses to burn your fingers LOL.

I hoped (very intelligently) that after the breakout we would have another leg up November and December style, but no. I had 3 setups negated on 1h Dow chart during this 2 days consolidation and the Dow (also Dax and SnP) displayed the same kind of weakness. Of course, I heard voices in my head that now the market would drop bigly but I don't listen to such voices and I ignore short setups in a rising market - 1d trend was still up. So I wouldn't have balls to short like that. However, I had a nice short trade today on 5m chart.

Trump's game is leading to the bankrupcy of the USA as it was stated in the Simpsons sitcom 16 years ago. Debt default is not so unreal.


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