Thursday’s Market Trend

The Dow Jones closed down 219.35 points or 2.49% to 8604.99

The Dow Jones produced a breakout from a bearish trend two days ago. It wasn’t a very powerful breakout because it happened on a down day. The breakout was also on the 61.8% Fibonacci Retracement Line which is the extreme movement line.

Ideally we would have wanted the breakout to be on an upday and above the 62% retracement line.

On the plus side, the market is finding support at the Fibonacci 50% line.

I am standing aside here waiting for the signals to go short or long.

Take a look at this chart below. It is the same Dow Jones chart but I have connected the Fibonacci Retracment lines to the bearish rally high and low. This is telling me a slightly different story than the first chart. Here it is telling me that the reaction could fall to the extreme 68.2% around the 8000 point mark which basically means that for the market to continue on its upward trend it will have to find support at that 68.2% or higher.

This is silly season remember.

If you want to learn more about trend lines and Fibonacci click on the “Market Club Videos”

Wednesday’s Market Trend

The Dow closed down 99.80 points or 1.12% to 8824.34

The Dow has just produced a “bullish breakout from bearish trend” which is a bullish signal. The bear market could be over.

I am not looking to trade any LONG positions just yet because at some point the market will have a bullish reaction and the old upper bearish trend line will be its support.

When the market does have a bullish reaction I will use the Fibonacci Retracements as a guide and my Bullish Reaction Breakout signal for timing a LONG entry.

There isnt much point in drawing bullish trend lines at the moment because it’s only the beginning of a new move.

We will watch and see what happens here.