Thursday, September 4, 2008

Today's Markets

This was a very important day from a technical perspective. And the reasons are very negative.


Notice the following:

Prices fell through three important areas of technical support today.

-- The first was the 50 day SMA

-- The second was the upward sloping trend line that started in mid-July (I should add this is a weak upward sloping trend line. I think the real line was the first one that prices violated in mid-August. But an argument could be made the second line was also a trend line).

-- The third was the lower line of the triangle consolidation pattern. The market has been trading between (roughly) 127 and 130 for the last month or so.

-- Notice the higher volume on today's action

-- Note the extremely strong downward sloping bar.

Today did a lot of technical damage. Let's take a look at the longer picture


The market is clearly in a down/up/down pattern. The market is also making a series of lower lows and lower highs. Also remember from above that today the market's broke a lot of technical support.

Short version: the possibility of going lower is very high.