Currently the 6th time in one hundred years the DOW has been as overbought on the RSI. In 1944 the DOW rallied 3.4 % higher first, then pulled back 4.5% yet in the other 4 times, the DOW pulled back 4-6% then had an upside bias for the next 2-3 years, where the DOW rallied 89% - 17% - 49% - 118% - 82% In each period after the rally finished, the DOW had a correction of 20% or more. See charts below for previous similar setups.
I am not advocating shorts or going long long at current levels. However, if price pulls back with noticeable support on the DOW around 4-6% similar to the past. I would use it as a long signal on all the indices for a potential 2-3 year rally that could take the DOW, SPX, RUSSELL and NDX much higher.
Year 1996 89% rally
Year 1955 17% two year sideways range
Year 1944 49% rally
Year 1927 117.98% rally
Year 1915 82% rally
I am not advocating shorts or going long long at current levels. However, if price pulls back with noticeable support on the DOW around 4-6% similar to the past. I would use it as a long signal on all the indices for a potential 2-3 year rally that could take the DOW, SPX, RUSSELL and NDX much higher.
Year 1996 89% rally
Year 1955 17% two year sideways range
Year 1944 49% rally
Year 1927 117.98% rally
Year 1915 82% rally
