Dow Jones Correction Possibilties
Current Views: Short-Term Bearish, Mid-term Bullish, Long-Term Bullish
US economy and business earnings are well this quarter; however the bullish run from late-2016 to January 2018 has run up steeper and steeper to the point of unsustainable growth. US equities have become overvalued as they have strayed far from the 100 and 200 day moving averages. Fears regarding inflation and rising interest rates were simply the trigger for institutional selling. I don't believe we will see a crash, but I expect to see a continual correction and definitely more volatility for the rest of the year. I present three correction possibilities:
Green Line: Possible 1987-like crash below the 100 and 200 day moving averages, but above 20,000 Dow. Panic selling leads to great opportunities to buy up stocks at low prices.
Red Line: Possible 15% to 20% correction below previous February low before moving back up.
Purple Line: Double bottom and continual move upward.
My strategy is to add to existing long positions and establish new long positions at all these levels. You may want to buy call options as well, though I would not recommend trading on margin as I expect volatility to continue throughout the year.
I expect the mid-term and long-term trend to be bullish. With proper risk management and entry strategies, I believe this correction can be very profitable.
Good lucking trading,
Eddy Yang
US economy and business earnings are well this quarter; however the bullish run from late-2016 to January 2018 has run up steeper and steeper to the point of unsustainable growth. US equities have become overvalued as they have strayed far from the 100 and 200 day moving averages. Fears regarding inflation and rising interest rates were simply the trigger for institutional selling. I don't believe we will see a crash, but I expect to see a continual correction and definitely more volatility for the rest of the year. I present three correction possibilities:
Green Line: Possible 1987-like crash below the 100 and 200 day moving averages, but above 20,000 Dow. Panic selling leads to great opportunities to buy up stocks at low prices.
Red Line: Possible 15% to 20% correction below previous February low before moving back up.
Purple Line: Double bottom and continual move upward.
My strategy is to add to existing long positions and establish new long positions at all these levels. You may want to buy call options as well, though I would not recommend trading on margin as I expect volatility to continue throughout the year.
I expect the mid-term and long-term trend to be bullish. With proper risk management and entry strategies, I believe this correction can be very profitable.
Good lucking trading,
Eddy Yang
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Watch my Stock Market Forecast for 2018 here: m.youtube.com/watch?v=xU7mtVoH...
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Check out my Dow Jones 100K by 2028-2030 chart:
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Dow Jones is dropping as predicted. I'm looking to buy at the stated support levels.