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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 Theories

July 26th, 2007 • Related • Filed Under

Today was a wild ride to say the least. I plotted a chart of the Dow Jones Industrial Average to explain the different courses of action in the days ahead.

On the 10-day hourly charts there are signs that the market is bottoming quickly in the short-term.

However, in the chart below there are some intermediate signs of more trouble ahead.

I threw up the Fibonacci Retracement grid to show key psychological levels for investors to work around.

djia

In the days ahead I wouldn’t be surprised to see the index hit its 38.2% pullback near 12,840.

The MACD, DMI, and RSI were all trending down opposite of the Dow which was struggling to make new highs. This was the warning sign to us all of the devastation that was to be brought upon portfolios across the country.

What’s troubling to me is that the MACD hasn’t really broken down yet. Once the (12,26) black line crosses below that of the EMA (9) red line we are in for some serious downside movement.

Might as well try to catch an elephant diving off the Empire State building if you were long in this market.

My long-term outlook gets a little brighter. I am still bullish overall due to the MACD & DMI bullish crossovers and breakout on the multi-year monthly charts. Take this as a healthy correction to adjust equity valuations. The market just needs to catch a deep breath.

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