The "pure TA" thing:
I'm posting this just because it should be known.
The overall pictures for the DJIA and the COMP look very negative, and have for several weeks now.
The move today was significant. The "traditional" TA people (NOT including TD) that you will see on TV will try and find horizontal support points for these down moves. A good example will be when the DJIA breaks down through 10,000 tomorrow morning. This horizontal thinking has never been accurate. Further, using the 200 day MA, everyone's favorite, is sadly lacking in its ability to predict certain moves, and this is one of them. I don't know what the P&F view is.
The bottom on the DJIA appears to be in the neighborhood of 8742. The move will not be straight down; there will undoubtedly be a retracement up above 10,000 at some point, if it occurs within the next week or two, it should be a move back up to around 10,681. In any case, anyone that is way behind right now will have a chance to average down and get out on the next move up, should they wish to play that game. (The trick to averaging down, of course, is to get the bottom on your second entry point. This is not easy for most people.) Big hard moves are actually a better indication of impending bottoms than slow moves down. Compare the DJIA daily chart to the COMP chart and you'll see what I mean. Although they both look bad, the COMP looks worse right now because it is just drifting slowly down.
The bottom on the COMP looks to be around 2684. I know this sounds bad. That's why I didn't want to post it earlier.
Again, the move will not be straight down.
These bottom numbers are the "worst case scenario" right now. If there is any change in the charts, the changes will indicate that these bottom numbers are too low. I'll let you know if anything changes. |
