My latest AI neural net forecast chart for the Dow Industrials shown below tells you just how overextended the stock market is right now. The Dow is subject to a mini-bear move heading into late January and early February 2017 as you can see.
The Dow’s downtrend should be starting almost immediately. In fact, it’s somewhat overdue already.
This is not really surprising. The Dow is extremely overbought, the most in over 20 years.
In addition, 60% of the recent gains to new highs are due to just five big-cap stocks: Goldman Sachs Group Inc. (GS), UnitedHealth Group Inc. (UNH), JP Morgan Chase & Co. (JPM), Caterpillar Inc. (CAT), and Boeing Co. (BA).
Meanwhile, thousands of publicly traded stocks on the New York Stock Exchange and Nasdaq are floundering … or in outright bear markets.
Yes, the Dow has indeed confirmed a long-term buy signal when it closed above 18,500 on the last trading day of November.
But as I have previously warned, that is not a trading buy signal, but simply a macro-trend signal confirming my long-term forecast of at least Dow 31,000, and potentially as high as Dow 45,000. Before it all comes crashing down.
In the near term however, the Dow is overextended and in need of a correction. Now is the time to target profits from the upcoming cycle low with the ProShares Ultra Short Dow 30 ETF (DXD). Here’s what to do …
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For ALL Members: Using 5% of the funds you have allocated to this trading service, buy shares of ProShares Ultra Short Dow 30 ETF, symbol DXD, at the market. |
Go ahead and get this order in asap. I’ll be closely monitoring a protective mental stop for you, but I prefer to keep it out of the market so as not to tip our hand.
Bonds are just as oversold as stocks are overbought and I expect a sharp rally at any time. Ditto for gold, so continue to hold your shares in TMF and UGL.
Best wishes, as always …
Larry
