Could the Dow be heading for a new yearly high?

The Dow Jones has been trading within a range lately. Any move out of it could be explosive, says John C Burford. So is it likely to be a fall, or up to a new high?

The question must be uppermost in the minds of many traders, as it is with me: could the Dow push through my tramline for a new yearly high? The market is only a hundred or so pips off making that high. And I find that startling.

Despite the well-known turmoil in the eurozone; the very weak economic recovery in the US with real estate still depressed; the marked slowdown in China; not to mention the gargantuan mountains of debt almost everywhere you look (except for many cash-rich large cap companies); the markets are knocking on the door to new highs.

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Week ending 8/836%27%36%
Change in week6%-8%1%
Long-term average39%30%31%

John is is a British-born lapsed PhD physicist, who previously worked for Nasa on the Mars exploration team. He is a former commodity trading advisor with the US Commodities Futures Trading Commission, and worked in a boutique futures house in California in the 1980s.

 

He was a partner in one of the first futures newsletter advisory services, based in Washington DC, specialising in pork bellies and currencies. John is primarily a chart-reading trader, having cut his trading teeth in the days before PCs.

 

As well as his work in the financial world, he has launched, run and sold several 'real' businesses producing 'real' products.