Jobs Numbers and Weak Retail Sales Push The DOW Down… As expected
As a chartist, I really enjoy it when fundamental news is released and price action does exactly what the chart predicted it would do ahead of time.
That’s exactly what what is going on with the DOW this week. If you’ve been following my State of the DOW series, you know that last Friday the chart showed that the DOW would test the 11,700 mark and likely drop back down and continue the downward trend; that’s exactly what has happened this week.
We started 2 day relief rally on tuesday; a rally caused because there has been so much selling pressure that prices are too good to pass up. However, if you took a look at the volume on Tuesday’s big 300 point up day, you will se there no real conviction behind the move. On Wednesday levels tested the 50 day EMA right at 11685, just below the 11724 retracement level.
Today, the market continued the trend of short relief rallies followed by down turns. However, volume today is very light. On the daily chart, I’m seeing the makings of a top triangle, which I’ll explain how to trade in my next article.
The weekly chart confirms that we are still in a down trend; following the rule:
Use the weekly chart for finding the trend, use the daily chart to for timing,
I still see a negative bias in the markets. Price action should confirm the top triangle and breakout to the downside sometime next week. If price breaks through the support on high volume, it will confirm the triangle. The price target on the breakout would take us to the July lows around 10,800.
Daily Timing Chart
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Weekly Trend Chart
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