InvestingDaily.com

Account Information

  • My Account

    Manage all your subscriptions, update your address, email preferences and change your password.

  • Help Center

    Get answers to common service questions, ask the analyst or contact our customer service department.

  • My Stock Talk Profile

    Update your stock talk name and/or picture.



Close
FEATURED STRATEGY

$1,230 in Instant Income?

$1,230 in Instant Income?Our top income expert recently pulled the wraps off his breakthrough moneymaking technique. And he proved beyond a shadow of a doubt how you can use it to generate instant cash payouts of up to $1,230 (or more). Over and over again. But then he took things a big step further and guaranteed you can make $1 million by following his program. And the second he did, our phones went nuts! Space is limited — get the details here.

 

 

Raising the Roof for the Dow: How Much Higher Can We Go?

By Linda McDonough on October 25, 2017

Retired chartist Ralph Acampora is giving a whole new meaning to the saying climbing the walls.

Mr. Acampora, often referred to as the godfather of technical analysis, has been documenting the rise of the Dow Jones on the side of his barn. When the stock market bellwether rose above 23,000 last week, he was forced to climb onto the roof of the barn to squeeze in the high mark.

Technical analysis, or chart work, is a trading tool used to evaluate stock prices to forecast their future movement. Statistics and data from trading activity, such as price movement and volume are analyzed to help foresee the next leg of prices.

Ralph Acampora, took a circuitous path to Wall Street. After attending St. John’s Seminary, a car accident landed him in a body cast and he had little to do during recuperation. His rehab time was spent devouring financial news, a turn of events that spurred him to jump lanes from the priesthood route to that of stock market analyst.

He was a frequent contributor to CNBC and began his career at Kidder Peabody, a then successful brokerage firm. The 76-year old would keep his charts by hand and had a “war room” dedicated to displaying these charts.

He knew even back then that the charts needed to be laid out in succession to help a trained chartist to recognize the pattern of the market.

When he bought a farm in Minnesota with a 70-foot long, 16-feet high barn, he thought the side of it was the perfect place to memorialize the movement of the Dow over his career.

The chart begins in 1967, the same year that Mr. Acampora began his career on Wall Street. The chart originates at the bottom left corner of the barn. Each month of the Dow is represented by a thick black rectangle. The length of the rectangle spans the high and low point of each month.

From 1967 until the stock market crash in 1988 every 6 inches represents 100 points. After the crash, Mr. Acampora had to shift the scale of the chart.

One hundred point movements aren’t as relevant as they used to be and those 6 inches add up quickly. Think about it, just year to date; the Dow is up 3,500 points. If Mr. Acampora were using his six inches=100 point scale, this year’s rectangle would be 17.5 feet tall!

In the summer of 2016 when he was planning and plotting out the schematics of the mural, he realized it was necessary to use a new post-crash scale.

From 1988 until the present day, the scale used is 12 inches for each 1,000 point movement in the Dow. This new scale shrinks the size of the chart down by one-fifth of the size it would be otherwise.

And yet, the barn is not tall enough to accommodate the runaway bull that has taken the market by storm in 2017. Just last week, the market technician had to use a ladder to clamber up to the roofline of his barn to record last week’s piercing of 23,000.

The mural was designed to illustrate the Dow’s movement until just the end of this year, so Mr. Acampora thought he was plenty conservative to accommodate for any upside in the market.

Certainly, Mr. Acampora isn’t the only one surprised by the resilience and strength of this bull market. Some might argue that marking movements in the Dow is an antiquated practice due to the odd construction of the index.

However, the rest of the market is just as hearty. The S&P 500, which mirrors a much broader slice of the market, is up 15% year to date and the tech-heavy Nasdaq up an astonishing 23%.

As a fundamental analyst, I spend most of my time analyzing the financial statements of public companies and researching industry trends that drive their numbers. I don’t put a lot of emphasis on technical work but must say that the paint on Mr. Acampora’s barn roof is a telling signal.

I’m not calling for any short-term crash but am bulking up my list of bearish plays for when the market starts to get messy. I’ve set up the portfolio at my Profit Catalyst Alert newsletter so that subscribers can benefit from bullish and bearish movements in the market. While having a few bearish bets won’t completely insulate investors from the pain of a market crash it can help buffer the pain if the roof caves in.


You might also enjoy…

 

Forget Buy and Hold. Here’s how to retire faster…

I’m not a fan of “buy and hold.” Gurus like to tell you that patience is the key, but I call horse puckey.

We’ve discovered an investing technique that consistently pays out easy-to-repeat profits.

One that’s proven to beat the market 2,082% in head-to-head testing.

And one that’s generated over 488 winners since 2011.

This method is so powerful, in fact, some of the investors we’ve let use it reported back to us saying they’ve made $71,425… $82,371… and even as much as $151,000 in a single year thanks to this “trick.”

That’s how powerful this investing technique is!

What what exactly is this mysterious method? I’ve put all the details together here.

Stock Talk — Post a comment Comment Guidelines

Our Stock Talk section is reserved for productive dialogue pertaining to the content and portfolio recommendations of this service. We reserve the right to remove any comments we feel do not benefit other readers. If you have a general investment comment not related to this article, please post to our Stock Talk page. If you have a personal question about your subscription or need technical help, please contact our customer service team. And if you have any success stories to share with our analysts, they’re always happy to hear them. Note that we may use your kind words in our promotional materials. Thank you.

You must be logged in to post to Stock Talk OR create an account.

Create a new Investing Daily account

  • - OR -

* Investing Daily will use any information you provide in a manner consistent with our Privacy Policy. Your email address is used for account verification and will remain private.