12_18_2015

I wanted to share a couple charts for the Dow, I hope I am not being redundant with previous posts but would like some feedback as I have only started charting about 6 weeks ago and feel the chartists on here are amazing and there is much to learn.

Chart 1 is a full view without any indicators for better viewing. The chart looks somewhat distorted so the triangle looks more like a pennant than a wedge but essentially shows that we not only dropped below the bottom flag trend line (burgundy) but also broke two other support areas, the bottom of the blue wedge and the support line (turquoise) from the volatile August chop. It held as resistance until it was broken in Oct., now acting as support it has been tested twice before and repelled both descents, last week could have been our fore shadowing event as we breached it intraday. Today we closed below the bottom of the flag busting through all 3 support levels.

The purple channel was included because it shows the short term trend before the Dow cracked in August, Armstrong has mentioned that if we penetrate 15,550 on an intraday basis we would not repeat a 2008 style bear market, but if we penetrated 15,284 (last years low) even on an intraday basis then this would indicate a serious correction into 2016, which according to him should not play out because the time line for this was to happen in October. The purple channel was included because it may act as some sort of support if we dip that low.

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Chart 2 has some indicators included, MACD looks as though it has much further to travel, Volume was fairly heavy for light trading season, Stoch RSI did an about face and is now bearish, RSI is below 50 and bearish as well. The only bright spot is that the 50MA and 200MA have crossed (barely), and like I say I am new to this but would be considerably bearish if it reversed itself next week. Another day of heavy selling could possibly accomplish this task. Keep in mind Armstrong indicated back in August that if we closed out 2015 under 17,823 then the correction could go into 2016 or 2017. Cryptic I know but something has been standing out in my head that he wrote, “In this market do not assume anything is cheap”.

Thanks and cheers!