INDEX UPDATE
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I am noticing that many are still looking for the BIG KAHUNA. It could still happen, but expecting it could be dangerous.
The DOW peaked at 8084 on Monday. Unless the DOW pierces 8084 to the upside the current downswing is still intact. Please keep in mind that markets dont go straight down or straight up, after they peaked or valley. I am expecting some sort of intraday rally today, and could get as high as retesting 8084, forming a DOUBLE TOP.
Statistically, a common pattern for a downswing after the peak is:
DAY 1 - FLAT
DAY 2 - UP,DOWN,FLAT. If UP, but peak holds-downswing still intact
DAY 3 - commonly the day of the bigger decline.
DAY 4&5 - if downswing continues, these days could be big down days
(TODAY IS DAY 2)
I am aware that many were expecting more negativity yesterday, but keep in mind that this is expiration week, so the market could get skewed a bit. Also earnings are reporting - and, of course, news/fundamentals can change/skew/overide the technicals.
NEARBY SUPPORT LINES: 7885, 7650-7700
Once a downswing starts it is common to expect at least a 50%(approx) retracement of the previous upswing, so in this case thats around 7775 on the DOW.
Again, I am not looking for the big KAHUNA - if it happens so be it.
The first signs that this downswing is intact would be if 7885 is pierced intraday, even if the DOW closes in positive territory, and the other sign is that 8084 holds.
I have stated before that so far the market has produced LOWER LOWs(many NEW LOWs), and LOWER HIGHs(recent peak), so that implies LOWER LOWs/NEW LOWs; however I AM NOT SURE OF ANYTHING, so I will just carefully watch support lines breaking or holding to determine further direction(linear approach).
I still believe, for now, that the TOP was formed on OCT 12 at 8084.
Seeya
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