On 1/15/09, the bears drove the Dow down to 7995.13 on intraday and the bulls took it back and closed on that day at 8212.49. The bulls remain to be in control on 1/16/09, then the bears took the control away from the bulls on 1/20/09 by driving the Dow down to 7939.93 and kept the bulls abated by closing under 8000 at 7949.09 for the first time since the Dow closed at 7506.97 on 11/20/08 (this is the next significant support level to monitor.) On the following day, 1/21/09, the battle continue with the bears drove it down to 7936.19, and the bulls took control back and close it at 8229.10. This continue for couple more days before the bears retreated and gave the bulls the control to bring the Dow up to a closing level of 8375.45 on 1/28/09. Then the bears start another attack on 1/29/09 by taking the Dow down more than 200 points, and stripped away most of the gains that took the bulls three days to accumulate. And that lead us to today's action where the bears continue to exert its forces to gain control by driving the market below 8000, until...a minute before the closing bell ring, and you know the rest of the story. The market closed at 8000.86, what a game!
What's in store for next week? Based on the technicals, the Dow is poised to go down to test the 11/20/08 low. But even if it does not come down to this level next week, I will be very defensive on any long positions I might take. Maintain reduced position size and set tight stops. It is not a matter if the market will go test that November 2008 low, it is a matter of when it will test the November 2008 low. As I have repeatedly stated, the primary trend of the market is still down, and the bottom has not been made. To be a bull now is to get slaughter. So be cautious. This is a market for traders, not for investors unless you have the time and the capitals to withstand major drawdown.
Here are the updated charts. As usual, click on the charts to get a larger image to view the comments. I will give my update on gold in a separate post.