Standing On the Precipice - DOW Edition

4 gen 2016

This post is very similar to my previous post regarding SPY (See "Links to Related Posts" below). I am very bearish on the DOW overall and I think we will see that translate into selloffs of DIA to retest the $171.00 level. The trading during the shortened New Years week was lower in volume, but still indicative of an overall bearish sentiment in the market. My forecast is that Monday or Tuesday may see DIA hovering around the $172.50 level before retreating even further to $171.00 later in the week. There is not much propping up the DOW at this point and I feel like we are on the precipice of another major selloff like we saw in August, with lower highs and lower lows preceding a breakdown to the $160's.

TECHNICAL ANALYSIS:

• Candle: Solid Red Candle (Bearish-Sellers had control of the market all of last Wednesday and most of Thursday)
  
• Volume: Increasing selling volume (Bearish)
  
• Stochastic (Slow): %D hovering around 30-40, %K descending, but greater than %D (Bearish-Sellers have control of the market)
  
• MACD: Histogram very slightly positive, but falling back quickly towards 0, MACD moving towards a crossover of signal (Very Bearish)
  
• Overall Trend: Downward-20 day EMA (Blue Line) nearing a crossover of 200 day EMA (Blue Circles) (Bearish)
  

Agree? Disagree? Any feedback would be greatly appreciated! Thanks, and happy trading!