The Dow has finally breached the major support of 11700-800 zone. Now, the market will continue to head down amidst rebounds along the way. Technically, there is no bottom in sight. And, I don’t like to make conjectural prediction on the long-term market trend, though this is a start for a prolonged downturn in the months to come. We will only deal with what is known to us a few days at a time. Anyway, do expect a pause in the market on Friday. This is usually the case when a big move had occurred. The reason can be attributed to the position re-sizing of fund managers and professional money managers. The market needs to adjust to a new market reality.
Meanwhile, you may continue to play the bearish markets. The trick is to find the safe window of entry to get in. If you are a longer term player, say up to three months to a year, you may want to check the weekly chart for more direction. The rules for long-term trading is the same as that of the short-term, daily position trading. You just have to change to a higher degree chart, such as the weekly or monthly. As long as the 20-day moving average is trading below 50-day moving average and the RSI continues to stay below 50, you may keep the bearish view for most the indexes.
More breakouts occurred in other indexes and stocks for yesterday. There were plenty of stocks to choose from to sell short or to buy puts. Potential for profits was great. The down market is always fast and profitable. Enjoy .
DJIA Daily Chart
The SPX had also breached the minor support. It is now heading to a new support level at 1270. We can expect new opportunity to come for us to take new positions or add on to the existing ones.
SPX Daily Chart
The Nasdaq finally broke its bullish trend to join other indexes to become bearish. I like the way the index broke its support - a gap amidst high volume. I can expect more big move to come. This is a profitable trade setup.
Nasdaq Daily Chart
Yesterday, I specifically highlighted Research in Motion (RIMM) as a good candidate for short selling (buying of puts as well) when market opened. It is still a good trade to take up if it makes a small rebound or stays put for the next trading session. The same can be said for Nike (NKE).
STOCK TO WATCH:
NIL
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The daily chart of EUR/JPY, FXE:FXY, the barometer of the yen carry trade, shows that the yen carry trade is unwinding. The weekly chart of FXE:FXY shows that the yen carry trade has topped out.
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