Dow Jones (11951) : Intermediate trend : Bearish
The Dow is in a “fractured” condition. The call to be taken is a) It will not fall much from here and will recover slowly, b) The worst is yet to come. Technically, as of now, the chart suggests both scenarios are possible, but the “time” is the most important element hereafter.
The Dow made a top at 14279 on 11th Oct 2007. Since then it has fallen to 11508 on 22nd Jan 08, (Sensex low 15332), the level which is quite close to the previous top made by the Dow in the year 2000. Till date, it’s trading above this low & struggling. Technically, the bulls are likely to stage a comeback, at least for the time being, if the critical area of 11500-11444 remains protected. This observation proves point “a” mentioned above.
Just after making a top in Jan 2000, the Dow started a 33 month long bear market. But after losing 19% in the initial 2 months, it went into treacherous 19 months long sideways trading in the range of 11300-9800, before finally breaking downward on the back of 9/11 terrorist attack. (See the box (purple color) marked on the monthly chart).
Now, even if the Dow has slipped into the long bearish faze- which itself is the most important question/point of debate for the entire world - it may not fall in straight line, here after, because the magnitude of the current fall is also 19% from the recent top.
