Dow Industrials 22,000 What Next

Traders at work on the floor NYSE

The media is trumpeting the Dow Industrials closing above 22,000 for the first time. In contrarian circles, when media headlines constantly herald bullish data points, it’s time to look for a pullback. Complacency has hunkered down for the winter, so it seems. VIX is near lows and everyone is happy.

Complacency has hunkered down for the winter, so it seems. VIX is near lows and everyone is happy.

Dow Industrial Components

The Dow is what the uninitiated hear when financial news outlets update market data for the day. The problem is, this only represents 30 stocks in the vast forest of equities. That said, few of the industrials are below their 50-day moving average,

 

Dow-Industrial-Components-08-04-2017
Dow-Industrial-Components-08-04-2017

Aroon for the Dow Industrials is bullish, with Aroon Up (green line) pegged at 100 and Aroon Down (red line) anchored firmly on the floor. Still, a pullback seems reasonable. It is this thought that has us treading lightly; put another way, we have been taking smaller positions and scaling out of winners near highs into strength.

A Broad Measure of Participation

Market participants are represented in the sectors and industry groups that form the S&P500. We consult its data points, assigning more weight accordingly when we utilize a Top Down Approach to investing and trading. If the index is good and the sectors are good, it follows the industry groups and individual stocks therein should fair well, most of the time.

As we’ve pointed out recently, the current period looks different than 2000 and 2007 market tops, in that NYAD is climbing and RSI is elevated. The latter has yet to trigger a sell signal (drop below 70). In addition, MACD is above its signal line and climbing.

More stocks, more participation, better decisions.

Finally, we will examine the NYSE Composite of 2000 stocks. Surely this will give us a better feel for where we might be headed?

NYSE Composite

Watch this index today. The moving averages are touching.

Happy Fry-Day and welcome to the new members.

Vinny

The Closing Print



 

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Vinny Gambini

Trade Fundamentals w/ Technical Analysis - CANSLIM method using high probability setups and Ichimoku Trend Analysis. Architect, Family Man and Father of three.