Standard disclaimer, be smart with your own money, blah blah blah.
I haven’t been putting that much time or energy into the market recently because I don’t care about money anymore.
However, ever since late January, the market has been more interesting than it has been in years, and the formation I’m seeing on the Dow Jones index is just so blindingly obvious that I felt I should point it out.
We have a symmetrical triangle here. Textbook explanation of such is:
- they usually do not make it all the way to the apex (where the lines cross) before breaking out up or down
- they can break either direction
- they often go out of bounds for a day or three and then come back to the boundary (a re-test) before going on to continue the direction they broke out in.
- volume usually decreases as the triangle forms
- they come with a measuring stick/projected move. The height of the triangle on the left end is the distance you can expect it to move once it breaks out.
Given all that, this seems like it lines up to the textbook explanation perfectly, so it’s high probability, though certainly not guaranteed, that the upcoming week or three will see the price on this chart (DIA) come down to the 230-225 range, at least for a brief time.
I bought some out of the money puts on this yesterday. I might buy some more if/when the price re-tests the triangle boundary in a few days. Do with this information what you will.