Friday, January 31, 2020

#Dow Industrials Review $DIA

Dow Ind Review
Those that view the message of the market on daily basis are likely confused by trading noise. While trading noise contributes to long-term trends, it does not define them. The focus on short-term noise rather than trends, a source of confusion for the majority of investors, leads to the creation of bagholders at major trend transitions.

The Dow Industrials' overall trend, revealed by trends of price, leverage, and time, are defined in the The Matrix for subscribers.

Subscriber Comments

ALIGNMENT (Price & Volume)

The Evolution of the Trade, Nibble, Flip, Reset, Decline, follows the monthly (primary) trend. The primary trend is either up or down. While disciplined traders follow the primary trend, they recognize the ebb and flow within it as the composite trend. The composite trend is defined by the monthly (primary), weekly (secondary) and daily (tertiary) trends. The composite trend ebbs and flows, moving in and out of alignment across the three time frames. The biggest gains tend to be made when direction of all three time frames agree. Consolidation comes when the three time frames disagree.

The Dow's 600 point decline on Friday generated consolidation, or disagreement of direction between the three trading time frames. The primary and secondary trends are up, but tertiary trend is down. Mathematically speaking, Primary Trend LTCO > 0, Secondary Trend LTCO > 0, and Tertiary Trend LTCO < 0. The composite trend might be better visualized better through green boxes. The primary and secondary trend are highlighted green, while the tertiary is not.

Dow Industrial's Primary Trend

Dow Industrial's Secondary Trend

Dow Industrial's Tertiary Trend

I have no doubt that many decided now is the time to short stocks. Shorting against a primary up trend, however, is undisciplined and dangerous. The bears, especially the permabears, will never discuss it, because few recognize the fractal nature of trends. It's possible that today's decline will be the start of bigger decline that ultimately flips the primary trend. Flipping the primary trend requires time and assumptions. The invisible hand does not care what we think, so be careful about assuming anything. The Evolution of the Trade requires a downside flip of the primary trend before a short can be taken. This applies to all markets in the Matrix.

Spend $165 and save $15 on the Subscription Level Access today. Expand your understanding of trends, cycles (time), energy, and participation.

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