I almost overlooked the Dow hitting a resistance level near 9260 today. The Dow sold off nearly 400 points after hitting this level 10 minutes before the close. It will be interesting to see what the market will do tomorrow. Will it test it again and break through it or will it head toward the October 10, 2008 low.
A related development is also found on the inverted ETF, DXD. The DXD is the ultra short on the DOW. It formed a candle with a small body and a long tail today, almost an ideal hammer. This type of candle formed after a brief downtrend is indicative of a developing trend reversal with bullish implication. Another bullish implication is the DXD intraday low bounced off the 50 SMA (the blue line on the chart.) All of these bullish technical developments are indicating a potential upward move for the DXD and a bearish trend for the DOW.
I will be watching for a potential long position on the DXD (short on the DOW via the ETF.)
