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How low can the Dow go?
Make no mistake about it, the market action this past Wednesday on November 19th was extremely negative for all of the indices that we track. The close below 8,000 on the DOW can only be described as negative, indicating further weakness to the downside. I am looking for this index to trade down to around the 6600-6700 level.
Looking at the charts using our "Trade Triangle" technology, it is clear that the Dow has been under pressure since our first major sell signal at 11,290. I see no reason to alter this stand, as I believe the trend will continue to be on the downside. I expect to see further weakness in the weeks and months to come.
Here are the three choices you have as an investor:
- You can go long a market.
- You can go short a market.
- You can move into cash.
I'm often amused when I see people buying "defensive stocks." Why not get out of the market entirely when it's going down. Doesn't that make more sense to everyone? However, most brokers want you to stay in the market at all times fearing that they will miss a bottom. Truth is, most investors (including brokers) missed the top, so what makes anyone so sure that they'll catch the bottom?
The key in trading is not to get out at the top, or in at the bottom. Anyone who tells you to do that isn't playing smart in the markets, and most likely claims that they are holding the "holy grail" of trading.
An investor's goal should be to capture 70% of a move. The middle is the sweet spot, and if you make enough in the middle then who cares about the tops and bottoms. Forget picking up the 15% on the top and 15% on the bottom, it doesn't work consistently to use it as a trading strategy. Check out my new video and see exactly where we got out of the indexes and were we see them headed right now...
Enjoy,
Adam Hewison
President, INO.com
Co-creator, MarketClub
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Insider TA™, developed by Stock Blocks®, is an end of day volume-oriented stock
trading tool that performs innovative technical analysis on Commodity
Systems Inc. (CSI®), TeleChart®, Metastock® (CompuTrac), Quotes Plus (QP2/QP3
only) and ASCII historical data using Equivolume, Point & Figure,
and Candlestick/Candlevolume charting
methods. Data is presented in an interactive animated
graphical environment.
Insider TA™ embraces Equivolume
Charting -- an analysis method created by Richard Arms, Jr. In
Insider TA documentation, this technique is also referred to as Box
Charting. An effective tool that excels at illustrating volume
cycles, Insider TA™ maximizes the potential of Equivolume
Charting by manipulating in real-time the interactive graphical
viewport, combined with the ability to optimize data for best signaling
performance.
Detailed analysis also incorporates an adaptation
of Joseph Granville's On Balance Volume, which we call Volume
Analysis. Point & Figure charting, although not
volume-oriented, is included for cross-referencing the signals.
Insider TA™ wraps all of these theories
into one comprehensive package, complete with Stoploss and Trailing Stop analysis,
Buy and Sell tag signaling, and a File Scanning tool. Insider TA™ is
the best Equivolume Software package for your stock analysis toolbox!
For more information on investment strategy and technical analysis
for Equivolume, Point&Figure, Candlestick/CandleVolume, refer to
our list of recommended resources.
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