What a day for the bulls? The Dow had gone all the way up with 178 points gain throughout the day. This immediately became a bull trap. The Dow plunged in the final hour from that high point to a loss of 11.8 points – A thrilling roller coaster ride. My prediction for the markets tomorrow? They should open with a gapping loss.

Apparently, the Dow could possibly have reached its interim high point by now. That means the bulls had had their time of the day. The bumpy ride is over. The baton could have returned to the bears in the final hour. Let’s check out the chart now. The weekly chart is the more interesting one for now. We shall look at it before the daily one.

DJIA Weekly Chart

From this weekly chart, we can see the 50-day moving average is just hanging right over the price bar yesterday. With the strong reversal yesterday at this point, it gives credence to the strong resistance of the MA-50 as well as the Fibonacci resistance I mentioned in yesterday’s update. The bullish rebound is shorter than I expected. If the Dow opens low and continue lower later today, we shall start shorting any stock or index associated with the Dow, the S&P, and even the Nasdaq. Options traders can buy puts, straight puts!

DJIA Daily Chart

The daily chart is the one I will use to time my entry and exit. The Slow Stochastics is in the overbought zone. This gives me a good risk/reward window of opportunity. I shall hit when the market opens right. My exit for my put options will be when the Slow Stochastics reaches the oversold zone. For stock traders, you may do the same or decide later whether to hold on for more profit.

Oh, yes, after two days of break, it is time to go back to work again.

STOCKS TO WATCH:
KBH, VLO, JWN, or any stock that shows the strong bearish bar. Minimum 5% lower

Subscribe to the post comments feeds or Leave a trackback