How low can the DOW go?

Posted on by The INO.com Team

Make no mistake about it, the market action on Wednesday (November 19th) was extremely negative for all of the indices that we track. The close below 8,000 on the DOW can only be described as negative, indicating further weakness to the downside. I am looking for this index to trade down to around the 6600-6700 level.

Watch my new video right here.

Looking at the charts using our "Trade Triangle" technology, it is clear that the Dow has been under pressure since our first major sell signal at 11,290. I see no reason to alter this stand, as I believe the trend will continue to be on the downside. I expect to see further weakness in the weeks and months to come.
What's an investor to do? As a trader or investor there are three choices you have as an investor:

1. You can go long a market.
2. You can go short a market.
3. You can move into cash.

I'm often amused when I see people buying "defensive stocks." Why not get out of the market entirely when it's going down. Doesn't that make common sense to everyone?

However, most brokers want you to stay in the market at all times fearing that they will miss a bottom. Truth is, most investors (including brokers) missed the top, so what makes anyone so sure that they'll catch the bottom?
The key in trading is not to get out at the top, or in at the bottom. Anyone who tells you to do that isn't playing smart in the markets, and most likely claims that they are holding the "holy grail" of trading.

An investor's goal should be to capture 70% of a move. The middle is the sweet spot, and if you make enough in the middle then who cares about the tops and bottoms.  Forget picking up the 15% on the top and 15% on the bottom, it doesn't work consistently to use it as a trading strategy.

Check out my new video and see exactly where we got out of the indexes and were we see them headed right now...

Enjoy the video,

Adam Hewison
President, INO.com
Co-creator, MarketClub

13 thoughts on “How low can the DOW go?”

  1. Adam

    Given the huge move to the upside since Friday, and given the annual Thanksgiving Day bullish tendancy, do you think the downside potential is going to start next week, or do you think we might see a trading range between 7500 - 9000 before a move to the downside?

    Chris,

    We recently covered our shorts and are on the sidelines. See this soon to be released video.
    http://broadcast.ino.com/education/silly_season/

    Thanks
    Adam

  3. MR. DUI I CAN UNDERSTAND WHY NO ONE HAS REPLYED TO YOU NO ONE LIKES A LAWYER THAT GETS CONVICTED CRIMINALS OUT OF JAIL AND BACK ON OUR STREETS I AM A FATHER OF THREE CHILDREN 28/ 26 / 16 SO I AM GETTING READY TO PUT ANOTHER TEEN DRIVER ON THE STREET WITCH IS A CHILDS DREAM AND YOU KNOW WHAT SCARES ME MOST A DRUCKIN DRIVER TAKING MY ONLY DAUGHTER AWAY FROM ME DO YOU HAVE CHILDREN OR GRAND CHILDREN ON THE ROAD IF SO I PRAY THAT YOU NEVER HAVE TO SUFFER LIKE SO MANY PEOPLE PARENTS AND CHILDREN ALIKE BECAUSE A DRUNKIN DRIVER TO THAT SOMEONE SPECIAL AWAY FROM THEM BECAUSE AL YOU THINK ABOUT IS THE ALMIGHTY DOLLAR I WILL PRAY FOR YOUR SOLE MR. DUI.

  4. Sir,

    I find the usage of the triangles very interesting.

    What is the success rate when using these triangles for trading?

    Looking forward to hearing from you soon.

    Regards,
    Bakar.

    P.S. I find your site very informative. Thanks for the effort put in by you and your team. Appreciate it very much.

    ---

    Bakar,

    We do not keep a % record and that is because there are all different traders that use a variety of methods of "Trade Triangle" uses and also different money management techniques.

    However, Adam does a recap of markets based on the suggested "Trade Triangle" technique. Please see the link below to his Q Recap post.

    http://club.ino.com/trading/2008/10/our-q3-results-matched-the-market-volatility-and-then-some/

    If you have any questions please let me know.

    Best,

    Lindsay Thompson
    Director of New Business Development
    INO.com & MarketClub

  8. I am having trouble accessing the video: how low can the dow go.Your website just keeps cycling back to asking me to sign up. I am already a member. please email me the specific steps and prompts that I should use to access the video . Thank you.

    Bill Canty

    Bill,

    Did you hit the play button?? Everything is working fine on this end.

    Cheers
    Adam

  9. Mr. Hewison- you have put together a very fine site. The market arena is full of piranha "experts" whose sole objective is to separate new traders from their money before the markets take it from them. I believe you are a man of integrity as evidenced by the myriad of support and educational materials you make available. Your desire to help make traders successful is obvious. Thank you for your time and efforts and for creating such an excellent site. Your "Trade the Triangle" approach is an excellent method to trading across multiple markets. Well done.

  10. Dow how Low video does not play -- keeps sending me back to the letter....

    Tom,

    Did you hit the play button?? Everything is working fine on this end.

    Cheers
    Adam

  11. Dear Adam,

    Adam, I am new to this trading, thinking about getting into your Market Club.
    I must confess, I have lost a lot of money, because I am a novice.

    My question...you are saying AAPL is going to 50.00..is this what you still think? I bought at $80.00and it is up today.

    Hope you will answer..I will feel so much better

    Thank-you Adam,

    Norma

    Norma,

    Thank you for your feedback and I apologize for this late reply. It looks like your APPLE trade is working out nicely. You have almost a 25% return in a very short time on your money and it would in my opinion not be a bad idea to take profits on half of your holdings and a close stop on the other half.

    For what it is worth we still see the longer term trend for equities as negative.
    Adam

  12. Adam,
    That is one scary forcast..Do you think we will get an oversold bounce in this area?? Maybe a Thanksgiving ramp as we normally do??

Comments are closed.