Year Of The Rat Begins...

This is the first full trading week of the lunar year of the rat. The Rat in chinese mythology is an extremely clever and kind creature which often gets overlooked but produces stunning results. This is also why it is the very first creature in the chinese zodiac. The stock market was brutally beaten, especially in that final week of the lunar year of the pig (yeah, and you are wondering why the market was so sluggish whole year). Will we see new signs of life starting this week with the rat on our side?

The Dow took back all the gains of the previous week (which was also the only significant up week since 2008 began) in one fell sweep last week as I have expected. With an extremely quiet week ahead (see economic calendar), I don't see anything that will stop the Dow from visiting and testing the January lows as anticipated. Could the Dow form a double bottom from which a rally could shape up? With plenty of ammunition in both the bull camp and bear camp, it is anybody's guess. The only important thing technical traders need to take note is a possible support at the Jan lows and not get carried away with the shorts. Most analyst take the lowest CLOSE as the Jan low (Jan low 1 in the pic), but prudent technical traders should take the lowest LOW as the Jan low instead (Jan low 2 in the pic). Remember, technical analysis is all about 2 principles: "Prudence" and "Significance".


Dow Technical Chart by Best FREE Charting Software, Telechart2007!