Technical Update 23 Feb 09 AMC
I am expecting DOW to free-fall further with a few technical bounces here and there to continue its fetish collection of Dead Cats along the way. Monday should consolidate, possibly to a modest upside as bargain hunters do their thing. 7,250 is a soft support which DOW should slice through like a hot knife through butter. Should that happen this week, then watch out 7,000!
I didn’t expect the DOW to “slice through” that easily! Not much of a tech bounce at the open but surely a lot of “no-confidence” ahead of Ben Bernanke’s Monetary Policy Report.
Dow Jones (Monthly Candles) '97-'09
Let’s review some statistics …
At 7,114.78, Dow is at an 11 year low, surpassing the 2001-2003 dot.com (intraday) recession low of 7,197.49 and below the 7,161.39 close of 27 October 1997’s Black Monday market crash.
The next previous low will be the 12 year old April 1997 Wash ‘n’ Rinse at the close of Friday 11 April 1997 at 6,391.69 and the intraday low the following Monday 14 April 1997 at 6,315.84.
DOW 1997-2009 S/R/T/C
There could be some support between 6,890 to 6,790 to 6,660. Beyond that, DOW is south-bound all the way to the December 1996 intraday low of 6,206 (soft) and down to the psychological 6,000 and the September-October retracement level of 5,948.
Upside will be limited to the psychological 7,500 and the downside channel resistance between now and end April 2009 (7,765 to 7,564). Optimists can look at the 11yr Historical Retracement at 8,044 and above that, the previous high at 8,320 (also along the 10 year down-trend line), which in my opinion, is stretching it.
DOW - May '08 to Feb '09
The DOW (above capture) now sits 34 points right above my (green) second term XXOP (7,080) from the May 2008 high. It has also broken below my 50% Fan-line on the way down to the 38.2%.
Lest we forget, the current (red) XOP is at 5,939 with an early time target of 4 March 2009, a (more realistic) mid-term target of 8 May 2009 and a longer term target of 24 Aug 2009.
In summary, what happens here on in is going to be either a major wash out before the April rally (if we get one) or a slow and volatile trudge down to the 6,000 level with the occasional Dead Cat along the way.
I cannot, in all good judgment and analysis, see any long term upside based on Rotation and Cycles. Should the market perform as I expect it to, look to Gold, Bonds and the Euro for upside potentials. Oil remains an enigma for now so it will be risky to bet on any Energy related sentiment.
This is still the Day Trader’s domain and will remain so for a while more.
If you enjoyed this post, please consider to visit Pattern Trader Tools, leave a comment or subscribe to the feed and get future articles delivered to your feed reader.
Comments
No comments yet.
Sorry, the comment form is closed at this time.