Thursday, October 28, 2010
This is a chart of the Dow Futures with the same trend lines from this chart, which I blogged on October 6th, extended to yesterday. In that post I was saying that the market looked like we were in a fifth wave up and that a minimum of 5 waves had been completed. Obviously that did not turn out to be the top and if an A-B-C pattern is developing, with a rising B wave ending soon, then I would have to find something that signaled to me that the up wave that started at the end of August was over.
Yesterday, the market came down and touched the bottom of that trend line which had held the market up twice before. Breaking below that trend line and taking out the previous low (Dow futures price of 10860 made on 10/19) would be a good signal that wave C down had begun. As I look at the futures price right now we are about 200 points above 10860 but only 25 points above the trend line. If we do head lower we will have put in a double top, the April high was 11,258 and the high made on 10/25 was 11,247.
In summary, nothing to act on yet but it is a good time to pay attention to what is happening in the market.
In the news, probably next week the Federal Reserve will announce it's plans for Quantitative Easing II. Also, insiders are selling shares at record rates.