DOW "Trump Pump" about to be erased.
An analysis of DJI and the Gold chart indicate that all of the gains since the election of President Trump are about to be completely wiped out. This represents an approximate 25% - 30% decline in the DOW. A topping pattern has formed in the DOW and I anticipate that it will complete any time between (July 8, 2018 - August 31, 2018). Once complete, the DOW will make a very sharp move to the downside beginning its journey back down to 18,000 (pre-Trump election level).
The "Trump Pump" can be compared to the 2017 Bitcoin bubble and the mid to late 2000s bubble in Gold in 2 respects. First, they each formed a very similar topping pattern and second, the rally previous to the topping pattern was based on nothing but hype and massive speculation. In each case, the entire rally preceding the topping pattern was given back. The "Trump Pump" was based on irrational optimism and all of its phony gains will evaporate in the coming months.
The Gold chart lends very strong credence to my DOW thesis. Gold thrives on bad news. When the economy is in a downturn and stock markets are declining, investors tend to park their funds in Gold. The Gold chart indicates that it is very close to making a move up to $1,500 (between now and the first of 2019), then it will have a slight pullback before pushing up to $2,500 within the coming years.
Here are the Bitcoin bubble and Gold bull charts:
The "Trump Pump" can be compared to the 2017 Bitcoin bubble and the mid to late 2000s bubble in Gold in 2 respects. First, they each formed a very similar topping pattern and second, the rally previous to the topping pattern was based on nothing but hype and massive speculation. In each case, the entire rally preceding the topping pattern was given back. The "Trump Pump" was based on irrational optimism and all of its phony gains will evaporate in the coming months.
The Gold chart lends very strong credence to my DOW thesis. Gold thrives on bad news. When the economy is in a downturn and stock markets are declining, investors tend to park their funds in Gold. The Gold chart indicates that it is very close to making a move up to $1,500 (between now and the first of 2019), then it will have a slight pullback before pushing up to $2,500 within the coming years.
Here are the Bitcoin bubble and Gold bull charts:
Comment:
The DJI topping pattern should complete anytime between now and the first of 2019. Alternate DJI rally trendline:
Comment:
I think that the bounce in the DOW has topped out.
Now it's probably going to be a bumpy ride down:
This topping pattern in the DOW is very similar to a topping pattern that happened in Gold during the run up to the 2008 financial crisis:
Now it's probably going to be a bumpy ride down:
Comment:
I have also completely changed my mind about Gold. I believe that Gold is probably going to go down and test the 2015 low around $1050. In the coming years, it may even go as low as $750.
Comment:
I may have been too early on my short call. This could be a reaccumulation pattern and I will be watching the weekly chart very closely. If price falls through the Higher Low level that I have marked on the chart AND RSI falls through the green and blue lines, then a short pattern is confirmed and we will retrace back to pre Trump levels. If RSI moves sharply above the red line that I have marked on the RSI indicator, then the price is likely to move higher above my risk level and I will cover my short position for a small loss.
Comment:
I covered my short position for a small loss. Although I am playing off of the Weekly Chart, the Daily Chart RSI just broke above resistance above 60 and my risk level has been breached on the Daily. I stayed disciplined and covered. It is possible that the Weekly Chart RSI could bump 60 again then turn around and form a failure swing. It is probably unlikely to do that but I will be watching closely and if a failure swing does in fact start to form on the Weekly RSI, I can always get back in.