Beginning of a Bull Market Correction?
A few days after my above post Europe gave Greece an expensive pill and was told it to go to bed and rest..... the global market was happy with that and the US Equity Markets bounced off that 12750 support and continued their Bull Run and squeezed out another 4% rise..In April the worries returned and the 12750 support got busted only to bounce back up to resume the bullish mood creating a 12710 support with an equal top .....until now!!
Now we are at another TA critical juncture today a break of that 12710 support to a lower low. The very slight Broadening formation has been created, it is descending in character, that being of equal tops and lower lows...this formation is under threat of a breakout to the downside as well.
http://i458.photobucket.com/albums/q...OW14052012.png
Bull market Correction is happening
The DOW broke out downwards from its slight broadening top formation towards its target of 12100.
This target will need selling pressure (e.g bad news) around the support zone if this target is to be reached...
In the meantime the downward movement has been arrested by a pullback which is common event (occurs 50% of the time) after a formation breakout.
Expect this pull back to test the bottom boundary of the old broadening top formation or it could go back inside it to test the 12700 area. If the pullback fails these tests expect the DOW to fall again towards it's target 12100 testing the support zone.
If the pullback is strong and busts back through the 12700 area expect it to rise to 13000 in it's quest to gain a new high which would indicate the Bull market Correction is over.
http://i458.photobucket.com/albums/q...OW22052012.png
DOW Theory signals a primary bear tide
A Bull market correction in progress??... or.... has the market topped out and the Bull has died??..........
Dow Theory says the Bull has died.
How relevant is DOW theory in today's world is debatable...however it's called a theory because of its proven track record....and it's has been impressive.
http://i458.photobucket.com/albums/q...ak23052012.png
17 May:- DOW Theory signals primary bear tide
Dow closed at 12742 today ... Recent media is signalling that the correction is overAll the buy triggers have gone off
Hmmm ...they assume the DOW and S&P500 is still in a Bull Market Cycle.
OK the 21st Century debate consensus is that the DOW theory is not as good as it used to be....
If the DOW theory is correct however ......the correction has not ended, it has begun in a form of a bear market rally (sucker rally). TA buy triggers go off with these types of corrections too.
So whatever you believe is happening atm just be careful around certain resistance points. Fibonacci Retracements between 1/3 and 2/3 area are typical secondary correction perimeters Since the retracement off the bottom has passed through the 50% the next area to watch is the 61.8% which is the 12850 area (not shown on chart). 13000 is another resistance area... both these areas are investor behaviour sensitive (psychological).
If this is a bear market rally expect the rally to peter out below the previous high. (13300)
If this latest rally creates a new high DOW Theory has failed (Modern day Failure rate less than 20%???) and the bull lives on.
Update of Post #843 Chart (22nd May 2012)
http://i458.photobucket.com/albums/q...OW18062012.png