MARKET COMMENTARY

It seems normal for a trading day to wobble in a range of more than 400 points in the Dow, probably higher. What looked like a bearish day could become a bullish day and finally closed at the last minute to a bearish one again. This is the kind of market we are in now. To certain extent, the technical analysis, and even the fundamental, can hardly apply in this turbulent market. Even news is lacking its predictable impact on the direction of the market. Ironically, luck is probably the only thing you can rely on to make money.

But, betting on the bearish move or selling into the strength is probably a reliable tactic, but not sure for how long. Yes, I am rather worried to trade in this kind of market at the moment.

The Dow looked like directionless. As the price action consolidating in shrinking volume, it may be headed in a triangle pattern. This is a staging period. As the triangle is small, it should be a continuous pattern. That means more bearish move is forthcoming. Watch the direction of breakout for confirmation before betting on the market again.

If the Dow continues to plummet as expected, I believe the intensity of the fall is less. Volume should further reduce. When we reached a point of absolute low, we strong bullish rebound will occur and a bottom is found. This scenario will probably happen in a month time, give and take another 2 weeks. Let’s watch.

DJIA Daily Chart

The Russell will probably break out faster than the Dow as it has more volatility than the older index. The Russell, by the way, is more profitable to trade.

RUT Daily Chart

The Nasdaq’s is more difficult to read. It has fewer common patterns to tell a story. But I will watch the support closely. The only thing that suggests a bearish move on Monday is the shooting star that had occurred on Friday. But this is rather weak, though not impossible.

NDX Daily Chart

STOCKS TO WATCH:

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