Federal Reserve Fuels Stock Market Rally! Dow Jones Breakout!
Updated
Hey Traders, I shared an idea regarding the Dow Jones back on June 9th 2017 & in that idea, I stated that the Dow was forming an Ascending Triangle. I placed a yellow zone on the chart in that idea to illustrate where traditional targets for the Ascending Triangle should be.. The Dow has managed to breakout of the Ascending Triangle formation & has shown the ability to hold that price level.. The Dow has closed above the upper resistance line of the Ascending Triangle for an extensive period of time which tells me that the market is getting ready to price in some new Fundamentals.
There are a couple reasons why I think this is occurring, however I am only going to share what I believe is the most important Fundamental that is driving this market right now- Janet Yellen of the Federal Reserve stated in her announcement the other day that interest rates do not need to move much higher and that they are currently at a neutral level therefore they are going to gradually raise interest rates if they see fit.. What the Fed is implying to the stock market is that they are going to continue to suppress interest rates at near all time lows.. This is a green light for the stock market to move higher! According to P/E Ratio's, stocks are extremely overvalued however stocks continue to appreciate due to near zero interest rates! If interest rates were to rise to 3%-4%-5%, stocks would be extremely overvalued & we would see a very big correction to fair value. I am expecting a big move to occur in stocks over the next month or so therefore this is a great opportunity to make a profit! The Dow looks like it wants to head up to the 22,400-22,800 price level.. Although the markets are in rally mode, we MUST Hedge our positions to protect our downside risk!!
This is a perfect scenario for stocks to head higher however we all know that we are in the 3rd longest expansion cycle in US History & that the markets are definitely due for a massive down move within the next year or so therefore we must play this smart & not leave ourselves over-exposed to one side of ANY MARKET! In order to last in this industry, we must protect our capital & one easy way that you can minimize risk is by hedging your bets! Hedging your bets is a crucial element of trading/investing, doing this will allow you to minimize your losses when they occur as no individual on the face of the planet is right 100% of the time! I think this may be a good long opportunity if stocks can close near todays highs & then follow through higher on Monday. I am personally long multiple stocks right now with a 10%-15% hedge for each positon. Please give me a thumbs up or comment below if you would like me to publish a tutorial regarding how to hedge your bets in a future idea. Thanks for viewing Traders & as always, I hope this was helpful!!
There are a couple reasons why I think this is occurring, however I am only going to share what I believe is the most important Fundamental that is driving this market right now- Janet Yellen of the Federal Reserve stated in her announcement the other day that interest rates do not need to move much higher and that they are currently at a neutral level therefore they are going to gradually raise interest rates if they see fit.. What the Fed is implying to the stock market is that they are going to continue to suppress interest rates at near all time lows.. This is a green light for the stock market to move higher! According to P/E Ratio's, stocks are extremely overvalued however stocks continue to appreciate due to near zero interest rates! If interest rates were to rise to 3%-4%-5%, stocks would be extremely overvalued & we would see a very big correction to fair value. I am expecting a big move to occur in stocks over the next month or so therefore this is a great opportunity to make a profit! The Dow looks like it wants to head up to the 22,400-22,800 price level.. Although the markets are in rally mode, we MUST Hedge our positions to protect our downside risk!!
This is a perfect scenario for stocks to head higher however we all know that we are in the 3rd longest expansion cycle in US History & that the markets are definitely due for a massive down move within the next year or so therefore we must play this smart & not leave ourselves over-exposed to one side of ANY MARKET! In order to last in this industry, we must protect our capital & one easy way that you can minimize risk is by hedging your bets! Hedging your bets is a crucial element of trading/investing, doing this will allow you to minimize your losses when they occur as no individual on the face of the planet is right 100% of the time! I think this may be a good long opportunity if stocks can close near todays highs & then follow through higher on Monday. I am personally long multiple stocks right now with a 10%-15% hedge for each positon. Please give me a thumbs up or comment below if you would like me to publish a tutorial regarding how to hedge your bets in a future idea. Thanks for viewing Traders & as always, I hope this was helpful!!
Note
This idea is an extension of the idea I published on June 9th. If you would like to see the first part of this idea, please click on the chart below & it will take you directly to those charts. Thanks Traders!
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Hey traders, I believe this is a good point in the Dow to begin reducing exposure. We got in very early on this move higher therefore I am going to begin locking in some profits. I do think the Dow will continue higher however nothing goes up in a straight line & it is very important that we do not get to greedy. I am going to close out some of my positions and reduce my size in others. With that said, I will still be net long the market with hedged positions. I hope this was helpful & educational!Trade closed: target reached
Targets for Ascending Triangle have been met! We were able to foresee a 1,200 point move using an old school simple pattern! Keep it simple & results will follow! I hope this was helpful traders!
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