Thursday, August 14, 2008
August 14, 2008; Bears Need Uptrend Line Break
Breadth closed almost flat yesterday with only about 56% of NYSE volume to the downside which is much less than the 72% yesterday. I can also count a 3 wave correction downward complete. So the signal for a short term bottom may be in. However the data that came out this morning has shot the futures down this morning and it looks like a pretty weak open this morning. So I want to creat a "breaking point" that should hint that wave 2 has topped and wave 3 of (3) is underway. Notice on the daily chart of the Dow above the uptrend line (orange line) that has formed. The market is telling us that this line is important because it's tested it several times. I'd like to see a break and close beneath the trendline, but more importantly I'd like to see a close beneath the previous low that touched the trendline. This level is at 11,388 in the Dow and 1262 in the S&P. A close below both those levels would indicate that wave 3 of (3) is underway.