Dow Jones Industrials Retreated

It’s down more than 180 points. If the current uptrend line is broken, the first support is at 8000-8100 level, which could become a good base to build some long positions if the worst is over. Let’s watch closely as overall it’s oversold at this point. The V shape bounce needs some time to consolidate even we’re entering a new uptrend.

The next support is 7500, which is previous low before this last leg down.

Dow Jones Broke Down

Dow Jones Industrial has broken its major support around 8000. There’s no clear support but some round number at 7000 or 6000. 5600 is a support.

Where will the market go from here? Not sure but we can try to read the market and right now it’s going south.

Market Rockets Back

All major markets rocket back over 10% today. A lot of short squeezes probably. I don’t believe that there’re so many longs that couldn’t wait and jump on the buying spree.

On the monthly chart of Dow Jones Industrial Average (INDU), you can see that we’re approaching previous low, which occured 5 years ago. Have we reached the bottom yet? Not sure, but we might be near the bottom judging by the previous low, which is the current support level.

The looming global recession is on everyone’s mind, so it’s possible that the support may not hold. There will be many ups and downs around that support. We can certainly play longs at the support level and shorts at any rally near 9,500/10,000 zone. The markets are currently in oversold condition and volatility will remain high as seen in the past a few weeks.

On the 3-month daily chart, INDU is moving away from the oversold condition. If we don’t see a follow through on this snap back, the downward trend will continue. 8,000 looks like a good support for now and the more fight between the bears and bulls around 8,000 the stronger it will become. If the downtrend continues, 7,500 is the next major support to watch.

Melting down …

The melt down continues. We have broken 9000 level. Looking back 10 years, the support level is around 7500.

Dow Jones Industrial Average is at oversold condition, but with current credit crisis still spreading and running its course, any technical bounce is possible but would not last long.

Unless you have significant cash positions, wait in sideline. Cash is king in this juncture.