Dow Directions
DIA (Dow ETF): Fed Firestorm! Here comes da cut, here comes da cut!
The Dow closed up over +100 points on Monday. After plowing through the 50% retracement level, then pausing on Friday to catch its breath, the market surged once again. In fact, the StoRSI, our momentum oscillator, has now moved back over its trigger level and has stayed there for the past three sessions. Strong markets can float a momentum oscillator, above the normal trigger, for extended periods of time.
The direction of the T8, our exponential moving average and trend definer, continues to point up…with an attitude. The trend was down for 30 trading days, prior to the last two weeks. Rallies back to the T8 are opportunities to BUY the market. Remember, as the market starts to climb: the steeper the angle of the T8, the further this market can rally. This is a market in its early bull stages. Take advantage of the first retracement to the T8. I hate to repeat myself, but the above paragraph is worth reminding us these very important reminders.
Monday’s big strong white candle is a sign of a strong market in a strong uptrend. What we must be monitoring for is a significant candle that has a high probability of stopping direction. As soon as I see that candle, I will issue the caution in a loud announcement.
***Volatility Alert: During the third week in July, volatility returned to the major stock indices. For approximately four years, the markets have had low to very low volatility. This significant change has ushered in swings of 100, 200 & 300+ points, sometimes on a day-to-day basis. Stock indices tend to be either volatile, or not, for three to five years at a time. Expect continued volatility. This volatility cycle is in its early stages and we continue to believe it is here to stay.
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Uncle Steve is a respected technician and Commodity Trading Advisor (CTA). He started his trading career with Merrill Lynch in 1975. That same year, Steve began system trading using moving average oscillators. Steve has designed numerous trading systems and market indicators. From 1997-2001, Steve frequently guest lectured at the University of Idaho, Washington State University and the University Centre, in Brig, Switzerland.
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