Short the Dow with SDOW.

The Dow is stretched and ready for a pullback. SDOW could give a 50% gain or more.

The Dow has blasted up 14.6% from the early low on October 13 which is clearly “too far, too fast”. It may simply ‘slow down’ if the S&P 500 and Nasdaq continue to push higher, but they’re also looking “too far, too fast”.

DIA is an ETF that follows the Dow, or you can buy the leveraged UDOW, which rallied 49.1% on the recent 14.9% move in DIA and DJIA.

It’s also important to consider the possibility of new market lows, which makes the need to catch the next short all the more important. A weekly view shows just how much downside is possible.

There’s no need to be early with your short, but you don’t want to give up too much off the bottom either since the market pullback may not be severe.

JC did well the past few weeks going long, SOXL (3x Semi): +48.4% in 2 weeks, $6.5 --> $9.65 (bought 2022-10-13) and SPXL (3x SP500): +22.6% in 3.5 weeks, $53.55 --> $65.7 (bought 2022-09-30). On Friday, he bought SDOW 1-batch at $28.04 after-hours.

The chart looks a lot like it did mid-August, so the odds are definitely in your favour.

Avi Gilburt is also expecting a pullback soon. “I expect a pullback to begin in the coming week. Support for that pullback is in the 3785-3830SPX region. And, as long as the market respects that support, and begins another impulsive rally off that support, then my next upper target is the 3971-4015SPX region. However, if the market is unable to hold that support, then it opens the door to a much deeper pullback which can potentially target the 3650SPX region. And, this can have a dramatic effect upon the manner in which I view the market in the larger degree.”

The horizontal lines show his support levels, and they look pretty reasonable, and a pullback all the way to 3650 is still substantially above the October 13 low, so the longer term picture could still be bullish from there.

From every perspective, it looks reasonable to sell your long positions and go short. SDOW might turn out to be a good choice in comparison to SQQQ, UVXY and others.

Saturday, Nov. 5 update: It was a crazy week with the Fed Day Fireworks on Wednesday where you could have bought off the low and bagged a quick gain of 14% selling early Thursday.

On Thursday evening, JC wrote, “On account of Friday in clinic diagnosis, I have placed to sell SDOW (3x bear Dow) tomorrow (2022-11-4) at $33.” Unfortunately, it didn’t get up to his sell price. I say selling early Thursday was the ‘right’ choice, then buying and selling on Friday also made sense. On a daily and weekly view, the Dow is still in ‘too far, too fast’ territory and needs to fall. So, as I indicated in the article SDOW and other shorts could make a long move higher.