The US stock market is speaking to you…can you hear it?
The voice was soft…
And if it wasn’t for Donald Trump. You may have missed it. He tweeted to the world…
‘New Stock Market RECORD. Congratulations, spend your money wisely. KEEP AMERICA GREAT!!!!! ’
The US stock market just hit all-time highs on Thursday.
Are you as excited as the Donald is? I find it a tad hard to outdo his excitement…
He’s on a mission. Well, two missions actually.
He wants re-election. But he also wants the Dow Jones at 40,000 points.
We’ll take a closer look at the Dow Jones to see if he’s on to something that I might be missing. More on that soon.
So, 40,000 points on the Dow Jones.
Geeze…it seems very unachievable at today’s levels.
But I guess you may have thought that when the Dow was at 10,000 points. Trying to get to 20,000 may have looked like an upward battle.
In the end it took 18 years for this to happen. The Dow hit 10,000 points back in 1999.
The difference this time is the magnitude to this change.
Let me explain…
When Trump took office the Dow Jones was at 16,000 points. At the time he said it was severely overvalued.
That wasn’t all he said about it though.
‘We are in a big fat ugly bubble, and we better be careful…’
So what changed after he took office?
I mean, nearly every month you’re reading a tweet about how great the Dow Jones is.
Beats me really.
It’s why you heard me say not to fight it. Trump had a straight line. All you need to do is follow it.
If only the markets worked like that, though.
Wouldn’t we all be rich by now…
I can hear Oprah saying…penthouse for you, penthouse for you…penthouses for everyone!
But that’s not going to happen today, sorry.
The Dow Jones Chart is at a new all-time high
Alright, let’s take a look at the Dow Jones.
Without it, Trump wouldn’t have anything to brag about…would he?
You can see the Dow Jones in the image below.
Source: Trading View
What you’re looking at above is a daily chart of the Dow Jones.
It has seven lines on it.
It may look scary, but it’s really not…let me break it down.
The red, yellow, grey and pink are support levels.
Meaning the Dow may stop moving lower if it hits one of these levels.
You’ve been watching these for the last three weeks.
It was two weeks ago when the Dow Jones hit the grey level. The Dow turned around and ran higher.
Today, I’ve added three blue lines.
These blue lines are resistance levels. They are higher than today’s price and should act as a barrier to rising prices.
Let me explain it below…
Without getting too technical, you calculate moves that happened in the past. Once you’ve got a good sample of data, you then project the same moves to occur again in the future.
Still with me?
Three new lines forecasting the future
In theory, the seven lines on the chart should indicate where price may stop rising and stop falling.
The three new blue lines were added because the Dow Jones is heading higher.
And if you make money trading shares…you want to know where it may stop moving higher. Which is why you try and locate future resistance levels.
I hope that clears the water…
As you may know, trading and investing is all about probability.
I’ll show you why this is important in the future. For now, we need to keep an eye on these levels.
It will help us understand how strong the Dow is.
So, the levels you should start to watch are around 30,000, 30,500 and 31,000.
That’s all for today,
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