Tuesday, July 6, 2010

Way oversold

It has been a brutal 2 weeks for investors. The Dow Jones has dropped 1000 pts. in the past 10 trading days(2weeks). The failure at the 50 dma(blue line) on 6/21, told traders to look for a new low for the year. And that's exactly what happened. The market made a new low for 2010 last week. Now stochastics are oversold at 6, and the 8 dma is way up at 10k. The market needs to consolidate the big drop it made the past 2 weeks. It does it by either going sideways, to let the moving averages catch up, or by rally up to them and/ or open gaps above. This week I'm looking for resistance at 10050(Monthly Pivot point) and support at 9500(monthly S1 pivot). We are not out of the woods just yet. There's more downside to come!