Market action today is further proof that the stock market is high volatile, and any kind of disruption continues to cause the market to falter. For instance, Israeli Prime Minister Ehud Olmert announced today that he will resign in September. This simple announcement lead investors to believe there COULD be destabilization in the region and oil shot up almost $5.
With the market hanging on every piece of news like it’s going to be the driver of market action, the looming second quarter GDP numbers due out Thursday are an extremely important indicator to watch. If you have a short trade in mind, keep an eye out for the numbers; I belive anything less than 1% will lead to a big down day for the markets. Following the GDP announcement, the Department of Labor announces job number on Friday. If both of these reports are positive or negative, look for the market direction to follow the numbers for at least 3 or 4 days.
Today’s Dow Jones Chart and Analysis
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Analysis
With the GDP and Job number looming, this chart looks all the more dangerous. If the number come out negative, the DOW has so many factors going against it.
- Today, for the first time in over 5 years, the 13 period EMA crossed below the 200 period EMA on the weekly chart. This is extremely bearish
- In late June, the market crashed through the 61.8% fibonacci retracement, signaling a market reversal
- In late December, the market indicated a 1-2-3 bearish reversal, with the Arron Down indicator cross the the Arron Up indicator, the Williams %R dropping below the 50% line, and the PPO crossing the 0 line all within a couple of day.
- There are no real positive indicators, patterns, or trends.
Combined with heavy short interest and put/call ratios, the market has a strong negative force pushing against it. I don’t believe we reached the stage where all of the negativity is built in the market yet, which will signal the beginning of market recovery. The nearest resistance is at 11,000, then again at around 10,200. I’m looking for the 11,000 mark to hold for now.
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