THE SETUP
Dow Jones Industrial Average ETF (DIA) is now trading back at the breakout level at high 270s.
What a gift!
I actually thought that we may not see this level ever again this year, but surely I was wrong, and here we are at 270-level today on DIA.
Anywhere in the vicinity of 270s is going to provide great support as you can see the rising pivot (see arrows). I’ve accumulated not only my 3X Shares (UDOW) today (I’ve been accumulating since 2018 Dec lows and 2019 June and Aug lows holding in FULL); but I’ve also added to my existing DIA LEAPS ( I’ve accumulated in June and August lows, and closed 1/3 at 292s in mid January, so I was holding 2/3 of it before the add today).
If it continues lower to 275 – 270 level this week, I will be accumulating more of my longs on DIA.
We would have to give it some wiggle room though going into next several weeks (don’t choke your positions to death with your insecure-tight stops, let it dance around for a bit before it can find a rhythm to the upside), but I believe a massive rally is going to be ensued from this level.
DIA Daily Chart
THE BIG PICTURE
Here is a weekly chart of DIA.
Base-breakout and retest on that pivot level (dotted blue line) while retesting that moving average (Weekly 25EMA in light green) and the pivot as I’ve annotated with blue arrows.
Check late 2016 (highlighted on the left), that was the retesting phase before a huge rally; we have a very similar setup here today (highlighted on the right).
Let’s also talk about the sentiment of the market in late 2016.
That move was right before the Trump inaugurations, you remember how bearish the sentiment was? Remember how people and “experts” were calling for the global market meltdown back in 2016? But what happened in 2017?
Today, we have similar sentiment as people are very much bearish and fearful in the market blowing any negative news out of proportion. It was the interest rate, and then it was the china deal, and now its the coronavirus—its always something.
I was bullish in early 2016, despite of the ‘negative news,’ as I was expecting a massive rally in 2017.
I was bullish in early 2019, despite of the market plunging 20% in late 2018, while everyone was calling for the “1987 Black Monday,” as I am expecting a massive rally later this year 2020.
DIA Weekly Chart
