6:06 PM
The patients behavior is markedly filled with mania and delusions of grandeur. The slightest whisper or rumor of something good causes a rapid response eliciting exuberance, excitement and mania, followed by a slow drift back to reality. When the reality of the patient's true dire circumstances are again recognized, the patient often drops into a deep bout of depression, like the one exhibited today.
Remember that the market is just people. And people are emotional animals. The collection of people that comprise the market are now behaving like people trapped in a snow-slide. The slightest hint that they may be rescued, even if it's just the whisper of the wind creates exuberance, excitement, and mania!! And when they realize it was just the wind, they return to depression, often falling hard and deep as happened today.
The Bear Flag has come full course, and true to form the market dropped precipitously today, breaking down thru the bottom of the channel as I have been warning over and over. All we needed was a catalyst, and we got that yesterday. So everyone should have been looking for short plays today if they read my blog.
While we did have a little rally at the end of the day, look for more downside tomorrow and perhaps again Monday (We'll have to wait to get a real read on Monday). We might get some consolidation here, but I am leaning towards a move lower, with a high probability of a test of the Dow 10,000.
Another somewhat remote possibility is finding support at the 10,450 level. There are two charts below. The daily showing the Bear Flag consummation, and a 3 day chart where you can see the pattern in May of last year that is very similar to today's pattern. This similarity also bodes for a bottom at 10,450.
And finally, keep in mind that while the global situation is difficult, it does not signal the end of life. Things are not good, but they are not as bad as the talking heads proclaim. In today's age, the news is no longer Walter Cronkite giving you the unbiased facts. Today the news is filled with drama, bias, entertainment, and the desire for ratings. Last quarters earnings reports were pretty good, all things considered. Let's hope for another positive round of earning when the new quarter arrives shortly. Perhaps we can replicate that bear flag of last year and move forward to a new rally.
CURRENT MARKET TRENDS
Long Term (Weekly Chart) - Down
Medium Term (3 day chart) - Down
Short Term (Daily Chart) – Down, Down, DOWN.
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