Today is Wednesday, May 16th, and we’re focusing on the Dow Jones, which hit an all-time high today. Let’s discuss this milestone, what it means, and what we might expect moving forward to help you navigate the rest of May.

Before we begin, please remember that trading involves risk. Do not trade with funds you cannot afford to lose.

Dow Jones Hits a Milestone

Today, the Dow Jones cash index reached a significant all-time high, crossing the 40,000 mark. These whole, even numbers often have a strong psychological impact on the market.

After reaching this milestone, the index started to pull back in after-hours trading. This pullback forms what is known as a “double top” pattern, a potential bearish signal indicating that the market might face resistance in continuing its upward trend.

Futures Market Insight

Looking at the Dow Jones Futures (YM), we see a different scenario. The YM did not reach an all-time high or form a double top. This divergence between the cash index and the Futures market is crucial and suggests two possible outcomes:

1. Futures Market Catching Up: The YM could still reach a new high, potentially confirming the double top pattern in the cash index.
2. Market Pullback: The divergence might indicate that today’s high was the peak, and we could see a significant pullback, especially as we approach the upcoming elections.

Anticipating Market Movements

Given the divergence and the psychological impact of the 40,000 milestone, a pullback seems likely before any further upward movement. This could present another buying opportunity later in the year, possibly towards the end of 2024.

Day Trading Strategies

For day traders, it’s essential to use various strategies to capitalize on these market movements. Here are some effective methods:

1. At the Open Method: This price action-based strategy focuses on breakouts at the market’s opening. Today, it signaled a long position right at the start.
2. Atlas Line: Provided by Day Trade to Win, this tool indicated another opportunity to go long, marked by yellow dashed lines and triangles on the chart.
3. Trade Scalper: Ideal for one-minute charts, the Trade Scalper also showed multiple long signals at the start of the day.

Combining these methods can provide a robust trading strategy, whether you’re trading the E-mini S&P 500, Dow Jones, or NASDAQ.

Conclusion

If you have any questions, visit DayTradetoWin and sign up for a free member account. They offer free software for NinjaTrader and TradingView, including the ABC and News indicators.

Until next time, good trading! If you want to learn more about trading price action, check out our next video, like, and subscribe to our channel.

Happy Trading!