A Scary Scenario

Dow 12,883 is emerging as a very important level. First, there was a low on Feb. 23 at 12,883.19. A week ago, Monday Feb. 27, the print low was 12,882.97. Yesterday, the low was at 12,883.20. We bounced off that level again, but somewhat less unenthusiastically. That area represents the bottom of a consolidation that has gone on for 11 sessions, as seen in the first chart. Its penetration would be a significant breakdown, suggesting a much larger slide.

Meanwhile, most of my indicators, including range, volume and volatility, are at minimums usually seen at market tops. Additionally, the Arms Index moving averages are very overbought, as seen on the second chart. Put that together with the penetration of the uptrend going back to late November and it becomes a scary scenario, and not one I want to buy into. A penetration of the above-mentioned support level suggests going aggressively short....250 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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