Time to Go Short

On Tuesday, I wrote about a critical support level in the Dow Industrials at 12,883. The thought was a break of that level would lead to a further rapid decline. But even I was surprised at how quickly it happened. The drop took the Dow to very nearly where one would expect: the lows of mid-February around 12,700, which becomes a new critical level to watch.

The bounce off that region was to be expected, and led to Wednesday's strength. The fact that it did not go all the way back to the old support level suggests a bothersome lack of strength. It looks as though we saw an important change in the last two days. That change is emphasized by the jump in volume to the downside. We are now in the right shoulder of a two-month head-and-shoulders pattern. So watch Tuesday's low as the neckline....314 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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