Market outlook for the week of Nov. 2, 2009
Well, I was wrong big time on my market call on Friday, as the Dow dropped 250 points. I thought there would be more manipulation that day by market makers. I still do believe strongly we are headed lower. I said a few days ago something big was in the air and maybe it is the coming correction. The volume was much higher on Friday and that suggests more of the same is coming. Expect us to go below the 50 day Moving average and eventually the 100 day as well.
The 3 charts above are all of the Dow looking at it from different time intervals to the close of Friday's trading on Oct. 30th. You will notice that if you looked only at a 4 month chart or even a 6 month chart you would not have the context to determine where we are in the Dow cycle. It is apparent that the 3 year chart which I have been using for quite a while is a very good indicator of where the index is relative to either a breakthrough or a correction. The 3 thin lines are the 50 day, 100 day and 150 day Moving averages. The Dow closed at the 50 day Moving average line.
I also wanted to reiterate this piece of advice. Watch the Nikkei for direction of U.S. markets! back on Oct. 20th post I showed a 5 year chart of the Nikkei and showed it had broken down the uptrend line and I said back then that the Dow will follow suit.