The Chart Pattern Trader

Ron Walker

Trump's Big Fat Ugly Bubble Is Ready to Pop and He's Likely going to get the Blame for it

President Herbert Hoover got elected Nov. 6, 1928. He walked in office in 1929 only to see the stock market peak and begin to crash 5 months later, and he was blamed for the whole thing. After his election the stock market had a post-election rally that soared 13.3 % to inaguration day in March of 1929 . Then another 7.7 % during His first 5 months in office. The Hoover rally soared a total of 21 % since election day. Then the bubble burst 5 months into His presidency and he got the blame when the bubble popped.

The post-election Trump rally gained 6.0 to His inaguration day and continues. This is so much like 1929 it is amazing. But just like the stock market bubble that Hoover inherited burst, so to will our current stock market bubble burst on Trump and He will get the blame, just as Hoover did.

'We are in a big, fat, ugly bubble.' So said Donald J. Trump at the first debate on September 28, 2016. The bubble didn't disappear when Trump got elected. It was bubble when Obama was president and it's a bubble now that Trump is president. Don't be blinded by your political ideology. It is bubble no matter who is president. Trump inherited a stock market bubble created by the Fed and he will likely be blamed for it when it bursts, as was Herbert Hoover right after he took office. Hoover became the fall guy for the crash. Whether you love him or hate hiim, the media will make Trump the fall guy for the bubble popping and the coming crash.


You can see my video posted on my Youtube channel at the address below. Copy and pasted it to your address bar.



The Extreme Point Rule

The directional movement indicator is a powerful tool for spotting shifts in market momentum. A buy signal is given when the positive directional indicator ( DI) crosses above the negative directional indicator (-DI), and conversely, when negative directional indicator crosses above the positive directional indicator a sell signal is generated. When the market is trendless the DI lines crisscross back and forth, which can generate false signals.

Solely following the DI and -DI cross signals by themselves can lead to whipsaws and overtrading. Steven Achelis offers a solution to this problem using the 'extreme point rule' in his marvelous book, Technical Analysis From A To Z. Achelis points to the creator of the directional movement system J. Welles Wilder, and his simple trading rule, to help prevent whipsaws and reduce the number of signals that a trader acts upon.

The extreme point rule requires a trader to mark the extreme price point the day in which the DI and -DI cross. According to Achelis, the extreme point is highest of point of a session when DI crosses above -DI and is the lowest point of the session when -DI crosses above DI. Buy or sell signals are triggered when prices move beyond the extreme point.


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