An InterestingAnalysis of DJ30 with the MACD technical indicatorWe are now in unfamiliar territory.
The MACD technical indicator Moving averages has crossed over above 120 points 22 times since 2003.
Of those, 22 times, 19 of them led to at least a mild pullback within a month.
3 times it moved sideways or down where no money could have been made at all within one month.
The MACD has crossed over 200 points 6 times since the early 90s, it was then followed by a pull back EVERY time within the month. In 2009, the minimum move was 250 point drop but then it went much higher in the following years. The largest pullback was in 2001 when it dropped 2700 points. The average pull back is around 1000 points, but there is a first for everything I suppose. Will it continue to go higher?
As this is a mature market, following years of stimulus and cheap money, my bet is that the market simply doesn't have the fuel to keep going and as the MACD crossover happened at such a high level, I see at the very least around a 300-400 point move down within the month. This presents a very good risk/reward opportunity.
