Despite the media bringing attention to the stock market lately with the Dow Jones Industrial Average (INDU) making an all-time high by closing over 20,000 it is nothing more than a transitory news item in the scheme of a trading strategy. Instead of focusing on the INDU eclipsing 20,000 think of it as just another number like a memorable birthday. It is more important to focus on the market structure leading up to and currently surrounding these new all-time highs. Structurally, the start of 2017 looks far different than 2016. Last year, trend indicators were implying that prices would be heading lower rather than finding a bottom in the months to come. For example, the slope of the 50, 100, and 200-day simple moving averages were all trending flat to down with shorter time frame moving averages leading to the downside. MACD exhibited a bearish crossover and MACD-H displayed a bearish turn lower. Additionally, price failed to make a new high during the latter months of 2015 which
Price-based perspective on market behavior