Last week we experienced a historical moment when the Dow Jones Industrial plummeted over 750 points!!!! This great trading opportunity was in the making for a few days prior to the major event of last Friday.
Let’s take a step back to November 8th, 2017 when U.S. Elections reshaped the economic landscape. Since last year’s election the Dow Jones has been steadily gaining about 650 points per month. In all the market have rallied over 40% since last year.
As mentioned in our Daily Review this phenomenon is very reminiscent of the 1980’s where after several years of lull in the markets Reaganomics fused the markets to record levels. Similar to how Trumpanomics is now fueling the markets.
Last Wednesday, we first had an anticipated Fed Rate Decision who have been looking to cool down the markets by raising interest rates. Technically speaking the markets shrugged it off but, showed continued weakness.
It was not until the catalyst of the NFP that we broke our support level at 26,000. Once this was broken the floor underneath us gave way and we tumbled over 600 points.
However to be in the game you must have followed several signs before the plummet. Firstly, the knowing that the markets ‘where due’ for a correction. Secondly, that the prior 2 sessions showed significant weakness.
Lastly, that we for the first time the Dow was down on the Weekly chart since Nov. 2017. These 3 signals are enough to give even a new trader the conviction to short the Dow.
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