Select the account you'd like to open


Dow turns inside out

Trading in the US 30 index since the US election is so different from the lead up that it looks like someone has taken two separate charts and glued them together. The US 30 tracks the Dow Jones Industrial Average (DJIA) which is comprised of 30 of the largest US companies. Given the USA's prominence in the global economy and the investment world what happens to the US 30 is important to investors everywhere.

Usually I write when I see market opportunities. That's a strategist's job. However, I'm unsure of the implications of this sea change. Notice the huge ranges, consecutive up days and the fact that the index has hit new all-time highs

One potential interpretation is that the share markets are entering a period of high volatility of volatility. There could be wild swings, followed by calm periods, followed by more wildness. This has clear implications for trading strategy. Risk management is always important, but especially so when a calm market can turn violent very suddenly. The flip side of this coin is that traders may see more opportunities, and see successful trades hit profit  targets faster.

The RSI at the bottom of the chart shows a strongly over bought reading. Traders rarely use RSI as a stand alone indicator (at least I don't) but this sounding is worth noting. The smaller trading range on Friday night could be flagging a turning point. I'm on alert for pressure on stocks this week.

Sign up for market update emails