Happy New Year one and all… We thought it appropriate to update our view on the Dow Jones Industrial Average in light of our entrance into a new calendar year.
Clearly, U.S. stocks closed 2013 on their dead highs as evidenced by the circled bar on the chart. The question, especially for those who took the setup we suggested (red arrow), is as ever, what now?
In our opinion, it would be tough to enter a long position at this point in the price cycle. That said, we are also not interested in getting short a structure like this. So… if you are currently long, consider moving your stop up to just below the 16,200 (just below resistance turned support) if you want to hold on to the long for as long as possible (no pun intended). Alternatively, you could used a tighter trailing stop, such as a 3 Bar Low (stop placed just below the lowest low of the immediately preceding 3 price bars). There are lots of different ways to handle an existing long. Just decide…in truth, you should have had a strategy before entering the position, but anyway…
If you don’t have a position, your job is to stay on the sidelines until price pulls back and gives you a good long entry or the price structure reverses to the downside. That’s right… sidelines… don’t act like you wanted to be in the game anyway.