SubscribeHold the Phone: Dow Jones not off the hook yet!
The Dow Jones Industrial Average avoided a major catastrophe the other day when shares rallied back above the key 12,000 level. What may turn out to be a bullish double bottom off major support could still roll over and decline further. It’s a fragile egg that the Fed doesn’t want anyone to mess with.
The reason I’m still skeptical of the DJIA’s bounce is due to the fact the S&P100 Index (OEX) made a new low. Since the S&P could be considered a leading market indicator, we should keep our guard up, especially if the recent rally turns out to be the one of the biggest head fakes investors have seen in a while.
On the six-month daily chart of the OEX, you’d notice that we still haven’t broken up through resistance near $615 yet. We attempted to cross this line already once before – unsuccessfully. If this thing suddenly flips direction and changes course…look out below — the house of cards will come tumbling down.
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