A Huge Move on the Dow: Are You Ready for What’s Next?
Updated
In this idea, I’ll be analyzing the Dow E-Mini Futures (YM) using a 4-hour bar interval. For those who don’t trade futures, you can follow along with Dow-focused ETFs like DIA.
The goal is straightforward: gather as many clues as possible to determine the most likely market direction.
Have a different take? Share your thoughts in the comments—let’s discuss!
My Analysis Setup
I’ve divided my screen into four quadrants for a comprehensive view:
Price Action 1 (Q1)
Price Action 2 (Q2)
RSI Action 1 (Q3)
RSI Action 2 (Q4)
What Does RSI Tell Us?
The Relative Strength Index (RSI) reveals momentum. A declining RSI typically indicates that sellers are gaining control, as selling pressure outweighs buying.
Q1 (Price) and Q4 (RSI): November 11–19
From November 11 to November 19, both price and RSI were in decline, marked by red arrows. This led to a pullback of 1,463 points before the Dow reversed course and ultimately hit an all-time high of 45,106 on December 4.
Q2 Price and Q3 RSI Divergence: After November 25
Post-November 25, price continued to rise, hitting new highs (green arrow), while RSI began to decline (red arrow). By the close on Friday, December 8, RSI showed continued weakness, but the price only experienced a modest 400-point pullback compared to the earlier 1,463 points.
What Does This Tell Us?
Earlier Phase (Q1/Q4): A declining RSI aligned with a drop in price, signaling sellers were in control.
Later Phase (Q2/Q3): Despite RSI weakening, buyers became stronger and more aggressive. They drove prices higher, limiting pullbacks and resisting sellers’ pressure.
This shift suggests growing buyer strength, with demand outpacing selling pressure.
What’s Next?
If buyers can clear out the remaining sellers, I believe the Dow could test 50,000, the next major psychological level for traders. Beyond that, the 100,000 mark could start appearing on the radar for the largest market players.
Based on Friday’s closing price of 44,706, I see any pullback as a potential buying opportunity.
Final Thoughts
This market is looking very bullish. The resilience of buyers, even in the face of weakening RSI, is a strong signal of upward momentum. Let’s keep monitoring for signs of continuation and see how long the bulls can maintain control.
Do you agree with this bullish outlook? Or are you seeing something else? Share your perspective in the comments!
The goal is straightforward: gather as many clues as possible to determine the most likely market direction.
Have a different take? Share your thoughts in the comments—let’s discuss!
My Analysis Setup
I’ve divided my screen into four quadrants for a comprehensive view:
Price Action 1 (Q1)
Price Action 2 (Q2)
RSI Action 1 (Q3)
RSI Action 2 (Q4)
What Does RSI Tell Us?
The Relative Strength Index (RSI) reveals momentum. A declining RSI typically indicates that sellers are gaining control, as selling pressure outweighs buying.
Q1 (Price) and Q4 (RSI): November 11–19
From November 11 to November 19, both price and RSI were in decline, marked by red arrows. This led to a pullback of 1,463 points before the Dow reversed course and ultimately hit an all-time high of 45,106 on December 4.
Q2 Price and Q3 RSI Divergence: After November 25
Post-November 25, price continued to rise, hitting new highs (green arrow), while RSI began to decline (red arrow). By the close on Friday, December 8, RSI showed continued weakness, but the price only experienced a modest 400-point pullback compared to the earlier 1,463 points.
What Does This Tell Us?
Earlier Phase (Q1/Q4): A declining RSI aligned with a drop in price, signaling sellers were in control.
Later Phase (Q2/Q3): Despite RSI weakening, buyers became stronger and more aggressive. They drove prices higher, limiting pullbacks and resisting sellers’ pressure.
This shift suggests growing buyer strength, with demand outpacing selling pressure.
What’s Next?
If buyers can clear out the remaining sellers, I believe the Dow could test 50,000, the next major psychological level for traders. Beyond that, the 100,000 mark could start appearing on the radar for the largest market players.
Based on Friday’s closing price of 44,706, I see any pullback as a potential buying opportunity.
Final Thoughts
This market is looking very bullish. The resilience of buyers, even in the face of weakening RSI, is a strong signal of upward momentum. Let’s keep monitoring for signs of continuation and see how long the bulls can maintain control.
Do you agree with this bullish outlook? Or are you seeing something else? Share your perspective in the comments!
Trade active
Even though we’re sitting near all-time highs in all indexes, and the whole world—including yours truly—is waiting for the Santa rally, I can’t help but scream: "WHAT THE HECK IS GOING ON WITH THE SEMICONDUCTOR STOCKS!??"
This year feels so different from the last. There are so few new long positions that have worked out, and honestly, it’s making me cautious. I’m starting to look at taking profits, even in a market that feels like it should be charging higher.
But hey, it’s still a bull market, and as they say, “Santa always comes… until he doesn’t.” Let’s see how this one plays out. 🎅🎄
Trade closed manually
Dow Idea Invalidated – A Warning Sign Emerges 🚨
Last week’s decline in the Dow invalidated the divergence idea of a continuation move higher. The actual set up to get into trade never came and for a while now, we’ve been seeing weakness in stocks that were once the market’s leaders, and this past week was no exception.
Now, even the favorites like GS and NVDA are pulling back, and the list of stocks making new highs keeps shrinking. At the same time, many stocks are already in bear territory—down over 20% from their highs.
This kind of divergence is a clear warning sign.
Less strength. More selling. Time to enjoy the holidays?
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