DOW After Open On 10/12/2018

Now that the Dow is open and we are mid-day into the trading session, I wish to document some of the happenings of the global economy.

Based on yesterday, which was a direction change… our next target is Monday the 15th next week. While we fell and held the bottom of the uptrend channel, this does NOT guarantee the decline is over.

What may happen in Monday is we can get a bounce, then resume the decline.
What you will want to watch is: 25754

Close below 25754 today at the end of the week, then we can assume that the decline will resume.

What we need to be aware of today, for worse case scenario is closing below 24965.
If we do this, we could have a drop another 1,000 points in the DOW.
We then have 23397 as our support and monthly bearish to hold us.

Long term we are still bullish, it is just no support below 24965, thus why a possible big drop. This market is volitile and wish for us to be prepared for worse case scenario as we move into the elections.

The Fundamentals:

The German Dax which is their main market, Intl trader capital was moving out, thus the drop since January. You can see the High in January in their market, since then Intl capital has been flying to the USA market, this was also the drive into October for the DOW, since the DOW is INTL money investing in USA. The DOW is the large cap stocks, the trophy wives and Intl investors see this as the best of USA companies.

So it can be assumed with money fleeing the DAX (Germany’s major index) they were adding it to US markets and the US Dollar. The international mindset is very pessimistic to what is going on in Europe and China. So they will park money where it is safe, thus the US Market.

So Why The Drop This Week:

It’s possible big money from outside the US is concerned with the elections going into November. Remember when you have a 50 million investment, you cannot just exit within 1 trade. It takes weeks to get someone to buy those back, thus why they are reducing their risk and just taking some profit to due to upcoming elections. This does not mean to exit Equities, it is the mindset of the other traders which we need to be aware of.

We still know the market is bullish, but it will be volitile and why analysts blame interest rates, they do not look at the economy globally and that is why they will lose on this long term bullish trade.

In Summary:

We need to be aware of 24965 on todays closing. This could lead to another 1,000 point drop.
We then have 23397 as our support and monthly bearish to hold us.
But remember, we had a drop like that in January and this thing came flying back.

Try to keep emotion out and lets watch the numbers. This is just to keep you confident of a long term bullish run that may be very volitile as we move into elections.

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