The Dow Industrials tripped a ‘mechanical’ buy signal with last week’s dip to the green line (see inset). The bullish Hidden Pivot pattern is not perfect for proprietary reasons that I won’t go into here, but suffice it to say, if this were the five-minute chart of some garden-variety stock, there would have been little reason to fear loading up the truck when the Indoos bottomed last Thursday. Yes, it’s difficult to be so blandly objective about the chart shown, because it is not some rinky-dink stock we are looking at; rather, it is a momentous chart whose ups and downs could foreshadow the health of the global economy over the next five years.

What’s Wrong with This Picture?

There are caveats, to be sure. Using the same fearless rules that govern the charts of stocks we don’t much care about, key resistance lies at the red line, 25559. But once decisively above it, at around 26,000, the blue chip average would become an even-odds bet to test the all-time high. There are a half-dozen powerful reasons why this ‘shouldn’t’ happen, including the nascent collapse of two key U.S. economic sectors: housing and autos. There’s also a growing likelihood that China’s economic downturn and a slowdown in Germany are about to spread to the rest of the world. A tariff deal with China would almost certainly reverse the bearish tide in stocks, at least for a while. But if there is no deal, it’s hard to imagine Wall Street summoning the energy for a last hurrah, let alone a sustained move into the ionosphere.