Dow Jones
The recent price action on the Dow Jones index reminds us of one of the legendary traders of Wall Street. At one point, Jesse Livermore said that a trader “should never argue with the tape.” What he wanted to say is that regardless of how much you want for the price to move in a certain direction, it won’t do so if the price action suggests the opposite.
The same is valid for the Dow Jones and the U.S. stock market in general. While many voices warning about an imminent bubble and a correction, the Dow keeps holding and testing dynamic resistance. Nothing seems to be enough of a reason for the stocks to correct. Instead, plenty of reasons appear to justify buying the dip. If it is not the Fed, then it is the crude oil price that triggers another leg higher.
The chart below tells everything about the current state of affairs in the stock market. The truth is that no matter how much bears would like to see the index falling, only a move below the pivotal 30,000 level would invalidate the strong bullish trend. Such a move will break the higher lows series, but in the absence of it, bulls will step and buy every single dip.
