Just a few trading days ago I wrote about the upcoming 10% correction for the DJIA. We got that this week and then a few extra points past it to solidify the point and rebounded as I said we would. The remaining question is if the bounce was only a dead cat bounce. That’s the second correction we’ve had in the past few months. That illustrates the insanity with the quick run back up the second time. We have to wonder if this time will be calmer on the DJIA’s return to the bullish side or if we are actually headed farther to the south east area of the chart.
Interestingly, the low on Friday was only nine points away from the high short-term high reached back in February. That’s the line I circled on the far left. The other three red circles are the lines I’ve written about for a while that were acting as a floor for the DJIA. That line broke this week which is a bearish sign. Also, the trend line that was the best/last up trending line I have drawn was broken.
We’re still in the downward trend that is shown by the steep lines starting in October. The only positive signs I see are that we opened the week above that line and also closed the week back on the long line of support I mentioned above. Breaking support in one week is bad, but breaking it two weeks in a row can foreshadow much more weakness coming. I’m discounting this past week a little due to the holiday, but do so with caution. This final week of November will be a lot more telling.
