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Dow Jones Gives It all Back in Dangerous Volatile Trading Session

Stock-Markets / Stock Index Trading Feb 05, 2009 - 03:10 AM GMT

By: Kingsley_Anderson

Stock-Markets Best Financial Markets Analysis ArticleSo much for progress. After a rather impressive move yesterday, the DJIA faltered and fell below 8000 once again. The index is sitting just at support. Once again, it fell below the trendline created in January (see the chart below).


This type of market action can be both mind-numbing and frustrating. Hang in there! It will get better- eventually. As I have mentioned before, this type of movement is constructive. The market needs time to heal itself after the beating it took from September through November.

One positive to consider is the VIX. While it was higher today, it is still in a downtrend. Another positive is the inverted cup with handle formation that is developing. Pay attention to a stock, or in this case the VIX, whenever you see a re-test of a low. If the bounce is weak, the support will likely be broken. It is not often you see a triple bottom. Notice the two peaks on the right of the VIX chart. After the re-test, the bounce was weak. This may indicate that the VIX will finally fall below 40 for a sustained period of time.

It is still dangerous out there for long and short position traders. Hold onto your money and wait for the next big move.

Positions: None

By Kingsley Anderson

http://tradethebreakout.blogspot.com

Kingsley Anderson (pseudonym) is a long-time individual trader. When not analyzing stocks, he is an attorney at a large law firm. Prior to entering private practice, he served as a judge advocate in the U.S. Army for five years and continues to serve in the U.S. Army Reserves. Kingsley primarily relies on technical analysis to decipher the markets.
Kingsley's website is Trade The Breakout (http://tradethebreakout.blogspot.com)

© 2009 Copyright Kingsley Anderson - All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

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© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


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