THE DOT - if this turns orange or red be alert

Friday, October 3, 2008

DOW medium-term technical outlook - bailout will likely not mark the low

The DOW weekly on the left hand is about to test the 10250 support line for this week. The DOW bear-trend has its 1 year anniversary next week.
The monthly chart shows that we are not at the real intermediate low. Respectively, the bailout will not turn around the market. We might and likely will get a relief rally of 10% for now. I doubt we take out the latest high at 11750 though. We need 4 lower weekly closes to mark a low and in such a phase of the market we usually need to drop below the monthly Bollinger band at 10000 to mark a low. This steep support line in a classic low will be taken out briefly to mark the real capitulation. The time frame is close to the election, since election day is the exact Uranus/Saturn opposition, which is the basic earmark of this downmove. The next event will be a rate cut by central banks with FED Funds at 100% for an October 50 BP cut pretty much confirming this. So do not trust the relief rally due now, since the technical picture gives way for a relief rally at this short term extremes (VIX close to 50). But for now, it looks like we have to go 5-8% lower from Thursday's close within 5 weeks to mark a real low which will produce a better buying opportunity short-term. Overall, the pattern will be like 2002/3 a double bottom, so we will fall back to those lows (at least) around at the end of Q1 2009.

No comments:


About Me

I am a professional independent trader