Invest In The Dow Diamonds ETF Based On The Study Of Cycles (DIA, XLE)

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July 21, 2009 12:14pm ETF BASIC NEWS NYSE:DIA

cycles“Cycles capture the sum totality of human behavior in the markets via rigorous statistical methods. Today, I’ll cover what’s foremost on readers’ minds: The Dow Jones Industrials


, the dollar, and gold. Then, I’ll show you a startling new forecast. First, the Dow Industrials: Is the recent rally from the March record low over? Highly unlikely,” Larry Edelson From HoweStreet Reports.

Consider this chart, based on my work using the data and cycle methods that my colleagues use at the Foundation for the Study of Cycles.

 Dow Monthly

“Although the Dow has pulled back on a short-term basis, the important intermediate-term 24 and 40 month cycles on the Dow have already bottomed and point solidly higher into April 2010. That doesn’t mean you won’t see more short-term pullbacks in stocks. You probably will. What this cycle chart does tell you though is …  That the downside in the Dow right now is limited … That selling short the Dow or buying inverse ETFs on a short-term basis is not the way to go right now, and instead … The correct strategy is to hold existing low-risk positions you might have entered into previously, and buy additional positions on weakness,” Edelson Reports.

That’s even more true now because the important short-term 10-week cycle should be bottoming any minute, as you can see from the weekly cycle chart below.

 Dow Weekly

“Bottom line: If you’ve acted on my previous suggestions to buy positions such as Dow Diamonds Trust ETF (DIA) … or even the Energy Select Sector SPDR (XLE), I recommend holding them for a continued rally. Since I first suggested them, these positions are up 19.2 percent and 13.2 percent, respectively. Now, you’re probably wondering, with all the bad economic news out there, how could stocks rally again? My answer: Who’s to say the news won’t improve? Besides, the best stock rallies tend to occur when hardly anyone believes stocks can rally, and precisely when news is bad. Hence the expression “stocks often climb a wall of worry.” I believe we’re in such a period now,” Edelson Reports.

Full Story: HERE

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