Today is Wednesday, May 16th, and we’re diving into the latest developments with the Dow Jones. Let’s explore the all-time highs it reached today and discuss what might happen next to help you prepare for the rest of May.
Before we begin, remember that trading is risky. Please don’t trade with funds you cannot afford to lose. There are always risks involved with trading.
Dow Jones Hits All-Time High
The Dow Jones cash value made an all-time high today, crossing the significant 40,000 mark. This milestone is psychologically impactful because whole, even numbers like 40,000 and 50,000 often influence market sentiment.
However, what’s noteworthy is that while the cash index hit a new high, it started to pull back after hours. This pullback is forming what is known as a “double top” pattern, which can be a bearish signal indicating that the market might struggle to rise further in the short term.
Futures Market Insight
Looking at the Futures market, specifically the YM (Dow Jones Futures), we see a different story. The YM did not make an all-time high or form a double top. This divergence between the cash index and the Futures market is crucial. It suggests two possible scenarios:
- The Futures Market Might Catch Up: The YM could still reach a new high, potentially confirming the double top pattern in the cash index.
- Market Pullback: The divergence might indicate that today’s high was the peak, and we could see a significant pullback. This pullback could be especially relevant as we move towards the upcoming elections.
What’s Next?
Given this divergence and the psychological impact of the 40,000 mark, I anticipate a pullback before any further upward movement. This means we might have another buying opportunity later in the year, possibly towards the end of 2024.
Day Trading Strategies
For day traders, it’s essential to look at different methods to capitalize on these movements. Here’s a look at some strategies:
- At the Open Method: This price action-based strategy focuses on the breakout at the market’s opening. Today, it signaled a long position right at the start.
- Atlas Line: This tool from Day Trade to Win indicated another opportunity to go long. The yellow dashed lines and triangles on the chart mark these signals.
- Trade Scalper: Ideal for one-minute charts, the Trade Scalper also showed multiple long signals at the start of the day.
Combining these methods can provide a robust trading strategy, whether you’re trading the E-mini S&P 500, Dow Jones, or NASDAQ.
Final Thoughts
If you have any questions, visit DayTradetoWin and sign up for a free member account. They offer free software for NinjaTrader and TradingView, including the ABC and News indicators.
Until next time, good trading! If you want to learn more about trading price action, check out our next video, like, and subscribe to our channel.
Happy Trading!
