sp'weekly7b - bearish H/S
sp'weekly9 - fib retracement
Summary
January saw the Dow lose over 800pts, today's decline of a further 326pts provides strong initial follow through to the downside.
There is high likelihood that we'll hit the 200 day MA - sp'1707, along with the lower weekly bollinger, now in the upper 1680s. Certainly, that would really give the bull maniacs a good scare, before some degree of multi-week bounce occurs in March/early April.
The busted Dow
The mighty Dow is in trouble, and we have a break of long term trend support. However, this is the only index (of six that I follow) that so far is showing this.
There is no doubt the US market has a real problem. The old resistance - which became support in November of 15500/600 is now resistance again. Next support is 15000/14750 - the old lows from last August and October. As many recognise, a bounce from there would support the notion of a large H/S formation, with a RS of around 15700.
Looking ahead
We have factory orders at 10am, and Fed official Evans is on the lose at 12.30pm.
*there is sig' QE of $2-3bn..bears should be somewhat cautious, but sell side volume should be enough to over-ride the new money. Any minor bounces...are to be seen as such, and re-shorted.
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Eyes on the bigger prize
Certainly, the move from 1850 to the 1730s is an interesting one..but really, in the bigger scheme of things, its a relatively minor multi-week fall. What the equity bears should be seeking within the next two months, is a re-short on the next bounce. So long as the next bounce - which will likely take 3-6 weeks to complete, puts in a lower high (<1850)...then we have the real chance of a major 15/20% collapse wave...as early as this April.
First things first though..lets see if we can hit that lower weekly bollinger band, which was 1687 at the Monday close - and which remains rising each week by around 10/12pts.
Goodnight from London