04-07-2009, 09:50 AM
Market Update (7 April 2009)
After two weeks of reflection and analysis, I don't think this is "the bottom" in the Dow Jones Industrial Average many longer-term investors would like to see. It would not surprise if me someday in the next year that low gets taken out. However, I think the current February bottom can hold for the spring months, potentially into the early summer. That is about the best guessing I can make at this stage of this Bear market decline.
Odds favor either a possible minor, intermediate or larger major Wave 4 rally is now in progress.
The best scenarios for the Dow Jones Industrial Average:
1) Short-Term: Will 8,000 resistance hold for the next two weeks? The harder it is for 8,000 to 8,100 to be broken through, the better the odds will be you can see a bigger pullback before the end of April. Odds favor this pullback would quickly pullback approximately 50%, to as low as 75%, if the advance since the February bottom starts to stall here. The lower it goes in the next two weeks the more we are interested in buying something on this pullback.
2) Near-Term: Monitoring to see if the market does not pullback but keeps inching towards 8,500 resistance, or higher 9,000 area. I would be surprised if this rally can sustain a move above 9,500 to 9,7500 before it has a major pullback.
The higher INDU goes without a serious pullback over the next 2 months, the more I will be seeking out the very best opportunities to eventually consider going Short at the right time and price.
For now, buying a (good) dip seems to still work for very aggressive traders who are maintaining tight trailing stops to protect those new trades. If we get no pullback this strategy will continue to work. The conservative trader still seems to desire a bigger pullback and will miss out if this happens. They will make their money later when they will eventually have better chances to sell into the higher resistance areas.
After two weeks of reflection and analysis, I don't think this is "the bottom" in the Dow Jones Industrial Average many longer-term investors would like to see. It would not surprise if me someday in the next year that low gets taken out. However, I think the current February bottom can hold for the spring months, potentially into the early summer. That is about the best guessing I can make at this stage of this Bear market decline.
Odds favor either a possible minor, intermediate or larger major Wave 4 rally is now in progress.
The best scenarios for the Dow Jones Industrial Average:
1) Short-Term: Will 8,000 resistance hold for the next two weeks? The harder it is for 8,000 to 8,100 to be broken through, the better the odds will be you can see a bigger pullback before the end of April. Odds favor this pullback would quickly pullback approximately 50%, to as low as 75%, if the advance since the February bottom starts to stall here. The lower it goes in the next two weeks the more we are interested in buying something on this pullback.
2) Near-Term: Monitoring to see if the market does not pullback but keeps inching towards 8,500 resistance, or higher 9,000 area. I would be surprised if this rally can sustain a move above 9,500 to 9,7500 before it has a major pullback.
The higher INDU goes without a serious pullback over the next 2 months, the more I will be seeking out the very best opportunities to eventually consider going Short at the right time and price.
For now, buying a (good) dip seems to still work for very aggressive traders who are maintaining tight trailing stops to protect those new trades. If we get no pullback this strategy will continue to work. The conservative trader still seems to desire a bigger pullback and will miss out if this happens. They will make their money later when they will eventually have better chances to sell into the higher resistance areas.