About the Author

Stephen Oakes is an experienced financial titan from New York who brings Wall Street to Main Street. Over the past 11 years, he has developed and tested the renown, Oakes Momentum System, which uses a unique constellation of technical indicators to find timely buy and sell points. He holds an M.B.A. in the United States (New York) and has studied internationally at the Reims School of Management in France.

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Dow Catches a Cold

June 7th, 2007 • Related • Filed Under

Many of you might be wondering just what is going on with the Dow Jones lately. After a thrilling ride to the upside, the index has trailed off in an equally violent fashion.

Here’s something to look at that might help explain why the techicals had me worrying. Like I said just days before, the market had reached a high probability of selling off in the short-term and that I had about 75% of the portfolio sitting in cash. And once again, the technicals and my gut instinct came through.

Let’s take a closer look into the six-month daily charts on the Dow.

DOW JONES

As you can see, while the Dow marched up, up, up, the Relative Strength Indicator (RSI) began descending at matching vertical points with the Dow’s price.

This was the sign of bearish things to come. It was at this point in time that the MACD indicator went into negative territory, thus leaving only the positive DMI to carry the bullish load.

In the end it just wasn’t enough to hold the floor and the DMI began to bend at the knees. If the DMI goes RED, Look out below!

Good Investing,

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