Technical Analysis of Financial Markets

Tuesday, June 06, 2006

Dow Jones - Bear Hug

So many bearish signals on the Dow. It all started with a breach of the Oct 2005 trendline which now has become resistance along with the 50-day moving average. Next, the 38.2% Fibonacci retracement level from the year high which had been providing support over the last week fell through. A Head & Shoulders formation looks complete with a breach of the neckline. A possible retrace to test the neckline and 38.2% Fibonacci level may provide a good entry point to load-up on short positions. Finally, it looks as if an Elliot Wave has somewhat formed; which if correct, may see the Dow retrace to the 61.8% Fibonacci level passing through the 200-day moving average.


stockshaker said...

Steve, Excellent blog buddy!

I read it religiously, love the tech analysis.

DrBubb said...

Nice chart, Steve.
Today is "Weird Wall Wednesday", as you may know. We get one every month, a week before Option Expiry.

It is often a day of big volatility, because as legend has it: many big traders roll over their options positions. One of the frequent happenings is a big drop. After which big traders unload their puts, and pile into cheap calls. When the big drops happen on these days, there is over a smart rally into the following week's option expiry. I think we are well set up for such a move today. but's let's see what the action looks like.

My own running market commentary and performance: