In yesterday’s issue #435, I showed you the latest of my AI charts on the Dow Industrials and recommended buying shares in the inverse Dow ETF, the double leveraged ProShares Ultra Short Dow 30 ETF (DXD).
You should be long that ETF now from roughly $14.18 – effectively short the Dow Industrials from current levels. My team and I will monitor the stop for you.
Right now, I want you to be aware of some simply amazing facts:
Despite another 40-point rally yesterday, the Dow Transports went the other way, plummeting 85 points.
The RSI or Relative Strength Index for the Dow Industrials remains at multi-decade highs, showing it’s extremely overbought.
Other indicators show the Dow more overbought – and fragile – than it was at the September 2000 and June 2009 highs.
Throw on top of that what my AI Neural Net models are saying …
And we now have one of the most bearish setups for the Dow Industrials since at least the crash of 2000.
The same applies to the Nasdaq and the S&P 500, in fact, nearly all major U.S. broad market indices.
If you have not yet purchased DXD, please do so as soon as possible, today.
One can never be sure, but everything is also setting up nicely right now for a potentially strong bounce in gold and in bonds, a temporary pullback in the dollar, and more.
Plus, my “gut trading” experience is telling me the next two weeks or so leading up to the Christmas and New Year’s holidays are not going to be your typical light holiday trade.
Also, hold UGL and TMF. They too are at potentially huge tipping points. When Yellen raises rates this week, we will probably see market rates fall and note and bond prices rally. Chief reason: They are already way ahead of the Fed and have moved rates way higher than the Fed wants to see. So don’t be surprised if you see rates fall when Yellen officially raises the Fed funds rate.
Naturally, that would be good for TMF. Also don’t be surprised if you see gold rally. The majority expect it to get hit again when Yellen raises rates tomorrow. But gold already knows a rate hike is coming and has already digested it.
Best wishes and please remain alert now, raise your defcon level.
Larry
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