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The 'Godfather Of Technical Analysis' Is Sounding The Alarm Bells And Investors Should Listen

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The 'Godfather Of Technical Analysis' Is Sounding The Alarm Bells And Investors Should Listen

Ralph Acampora is the director of technical research at Altaira Capital Partners and earned himself the nickname is being the "godfather of technical analysis." Needless to say, when he talks, investors should at the very least listen to what he has to say.

Speaking as a guest on CNBC's "Futures Now" segment last Friday, Acampora said the "Trump rally" is currently going through a pause in the short term as the market is now testing its March highs. But beyond the short term, the market may be signaling trouble ahead for bulls.

Acampora cited the "oldest theory in technical analysis," the Dow theory, which explores the relationship between the broader Dow Jones Industrial Average and the Dow Transports index. Since the Dow transports index is now trading "well below" its March highs, then the Dow theory calls for a dip ahead.

Not The End Of The World

If the theory holds true, then Acampora believes a bear market could result in a 15–20-percent decline in stocks. But the good news is the expert doesn't view this decline as "the end of the world." In fact, a decline of up to 20 percent would represent "one heck of a buying opportunity" for investors.

Nevertheless, Acampora has some advice for investors who may want to take money off the table in anticipation of a market decline. He thinks that so long as the Dow Jones Industrial Average trades above 20,404 and the transport index trades above 8,874, then the "secular bull" market remains healthy.

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Image Credit: By Schreibwerkzeug - Own work, CC BY-SA 4.0, via Wikimedia Commons

 

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