Wednesday, November 23, 2011

Trend line

Market moved another 60 points down since my last post but bears may take a break here. I told you last time that if market goes bellow 1220 the next stop is going to be 1120. Well... I didn't realize that the new 2009-2011 uptrend line (the 4th so far) is around 1160, the level almost touched today.

These bull market trend lines are very important. Once they are crossed they spell trouble for the market. At the same time they are good support levels so if you are in the bears' camp (and I hope you are) you may be carefully here since a bounce on the upside is possible. Even if the market is going to bounce up from here I don't think is going to be for real, meaning that market will eventually go bellow the uptrend line.

Looking at the weekly DMI I can see that there is plenty of room for more downside movement since the red line is far from forming a peak.

The two hours chart give some useful information as well. The sell signal generated around 1220 was real but DMI is forming a peak so, again, we may see a bounce up from here or at least a few flat days. It all depends on your time frame. If you are a fast player you may need to take in consideration these signals, if not you don't need to bother too much since the market most likely is going to resume its fall after a brief move on the upside.

I am going to stop here, my hand still hurts after my accident.

Happy Thanksgiving!


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