Well, 8 days in a row that the Dow has been down after topping out at 25,400 back on June 11th and having tested 24,400 for an even 1,000-point drop yesterday afternoon. That’s right about a 4% correction on the nose and the 5% line is 24,130 so, if we assume that is the full pullback (not yet completed), then the fall is 1,270 points and we’ll call that 1,250 and look for 250-point bounces so a weak bounce would be 24,380, which is the 4% line again and the strong bounce, to the 3% line, would be 24,630 so that’s the line we need to see the Dow take and hold today in order to be impressed. In fact, 24,658 is the 50-day moving average on the Dow – so let’s make sure we get those extra 28 points too!
The Dow is down 1% for the year so up 1% (250 points to 24,750) is also very important to make. Meanwhile, as you can see from the chart above, the Nasdaq is still up 12% for the year – though we made a lovely $5,535 on Wednesday’s short position (see yesterday’s Morning Report) and we HOPE it bounces back towards our shorting line at 7,300 so we can do it again.
I’m still on the 6,500 bandwagon but I don’t know when so better to make $1,000 80 times than spend 3 months waiting for a big drop!
Well, now we can cross 5 of those 80 times off the list! Overall, it’s just been a small correction but it’s more the failure at the top that we’re watching, and we’ll see if we can retest that next week. As I noted earlier in the week – nothing really matters unless the NYSE can retake 12,800 and I doubt we’ll even get to test that today so it’s a “watch and wait” day into the weekend.