In our last update on the Dow [see: Dec 11 Update] I mentioned that it was coming up on important support.
if DJIA should happen to plunge below its purple .886 at 23755, I’d sure want to be short.
As it turned out, we had less than a week to wait. DJIA dropped through 23755 on Dec 17, and didn’t stop until it reached 21712 on the 26th — a drop of 8.6%. Since then, it has recovered all of those losses and more. Is the coast clear?
Maybe. But, it’s important to note that like SPX and COMP, it is backtesting a point of potentially strong resistance — the neckline of a large Head & Shoulder Pattern that never completely paid off.
As we discussed back in December, if it can’t retake the neckline, things could get pretty ugly.
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