Dow Theory and Current Market Conditions

Look into DOW Theory, look at SPX on a 1y:1w and 20y:1m, and convince me that we aren’t in a Distribution Phase (at least the beginning of it) of the Primary Trend of this Bull Market. Market conditions seem wobbly to me. It seems like we’re having a decent amount of sideways action after a long rally which definitely makes me nervous.

People often go onto CNBC trying to act like its not, and that interest rate cuts are going to continue work right now. When realistically we will see a 20% correction again before those help, although that short lived correction last year is on my mind and a bit confusing. With: global manufacturing in a downturn, European banks with super high Texas ratios, corporate debt rate/EPS ratio increases in the past 10 years, retail slowdowns, political issues with China, I feel like we’re balancing on a needle right now. Maybe US interest rate cuts will keep things chugging along. With Global interest rates much lower already I’m not sure what is going to come out of this. Quantitative easing isn’t working globally, but since July it seems to be keeping things up in the US.

Maybe I am naive and making this statement too early

Am I wrong? Is a correction not bound to happen soon? From what I can tell we are currently riding at the top of the wave. But hey, we had a weird correction last December that we recovered from. Since it was so short that can’t really be called a recession. I’m not expecting a bubble but instead a slower paced 1.5y recession. Things are interesting right now but its hard for me to CURRENTLY hold a LT bullish outlook.

DOW theory:

Here is a link that explains DOW Theory pretty well so give it a read!

https://www.metastock.com/customer/resources/taaz/?p=50

Check out this link to a Ray Dalio Interview, he seems to have a super comprehensive understanding of macroeconomic systems: https://thetradingspace.com/2019/11/15/video-interview-ray-dalio-central-banks-will-get-so-desperate-they-will-give-money-away-march-2016/

About the author: Dominick Muniz
Creator, web-developer, and writer at The Trading Space.

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