Saturday, January 24, 2009

Tug Of War

This week was quite an interesting week for the DJIA. In the last six trading sessions, the DJIA dipped below 8000 five times with it closing below 8000 once. It looks like clockwork, whenever the Dow dipped into the 7900 level, the bulls come out and turn the market around. And when the the Dow is back into the 8200 range, the bears push it down again. This tug of war not only indicative on how volatile this market is, but it is also telling us there are still strong forces to move the market down. Since the market's primary trend is down, the more times the Dow is being tested at the 8000 level, the higher the chance it will break below it and move further down. Therefore, next week will be interesting to watch on how this battle between the bulls and bears will play out. Since it is earning report season, any unpleasant surprises on the earning side will tip this battle toward the bears' favor. Here are the updated charts for the Dow, SP500 and the Nasdaq 100 (click on the image to get a larger view of the chart). Hold on to your seat for next week's battle of the bulls and the bears.







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