Knife Keeps Falling...

FUNDAMENTAL ANALYSIS
PheW~! After a few good days of shaking off some burnt-out-ness in me, I came back round to doing my job serously again. Yes, being a professional trader and economist is a serious burn-out job due to the fact that the US enjoys no extended holidays that countries like China does (1 week!!! Twice a year!!!).

Ok, back to the market.

Things are changing even though the proverbial knife continues to fall and the proverbial shoe continues to bounce on the head of some big financial names, waiting to drop. Even though the Dow continues lower on the bearish momentum, there are a few differences today... 1, the dollar staged the biggest single day rebound in a long long time. 2, The Dow managed was positive for most of the day. 3, Crude oil drops on Saudi comments. 4, VIX at above 30 once again. All these shows that something is changing in the macro environment that may eventually cause a change in the equity markets. In fact, I think the regression to the mean is kicking in right now. Tomorrow's home sale number, which is not historically important, is going to rock the boat hard tomorrow (see economic calendar). In fact, any housing numbers will rock the market in today's environment. The beginning of the end of the drop has begun but its just not there yet... be prepared.

TECHNICAL ANALYSIS
You don't want a powerful reversal signal like the dragon tail formation to fail because if it does, a strong continuation of the previous trend prevails. That was what we witnessed on the failed dragon tail formation of last Thursday. The Dow seems to be finding some support right now at the 50WMA line even though the support doesn't seem very strong. We will be watching the strength at the 50WMA line for technical evidence of a reversal over the next few days but for now, if the 50WMA fails, then we could get a visit to the 100WMA line at about 12100.

BROKER ALERT!
eTrade doesn't look like it can hang on anymore with its balance sheets completely haywire. It definitely needs a bail out but nobody wants to bet on it and if I am an account holder, I think its time to move my money somewhere else... safer and more stable.


Dow Technical Chart by Best Charting Software TC2007!