Dow Fails At Resistance Level...

FUNDAMENTAL ANALYSIS
What a day! What a D-I-S-A-P-P-O-I-N-T-I-N-G day for all investors. Rarely do we see such a huge barrage of disappointing news coincide in one day. The Dow is down 280.28 points in a single day on 3 main reasons : 1, Plunging Consumer Confidence Numbers. 2, A series of bank downgrades casting shadow on the credit crunch. 3, Fed's unwillingness to take any significant action (rate cut?) to relieve the current credit situation. All of these occurring after such a strong run up last week and a strong resistance level gave investors all the reason to take profit. I seriously don't know what the Fed is brewing in their secret cauldron but whatever it is, it better be done quickly....

TECHNICAL ANALYSIS
Well, like I said yesterday, do not be surprised if the Dow pulls back a little in the face of the resistance level. Even though 280 points is not really a "little" but in the face of the overall mid term trend, it remains acceptable. This huge plunge is also strangely backed by only an average volume. This suggests that the majority of the investors out there are still holding on and watching what happens next. Indeed, one day moves in the Dow is never reliable. In fact, I tend to look at a 2 days time frame more and more these day. That said, the Dow does has the potential to really laspe into a long term bear trend. If the Dow continue to plunge and break the 16 Aug close, or worse, the 16 Aug low, it may start a long term bear channel making a series of lower lows while bouncing off the lowering 30MA line. The next 2 days will be critical. If the Dow do not rebound immediate to challenge the 30MA resistance line again within the next 2 days, we might really have to prepare ourselves for the worse. The worse do not happen easily neither does it happen frequently, but who says this may not be one of those infrequent times?