Bearish Breakout?

The Dow slumped decisively by over 5% today but does it signal the bearish breakout that we have been waiting for? Not yet. Today's slump only put the Dow down to the bottom of the triangle formation and atop the 8500 support level. This not yet a breakout. To qualify as a bearish breakout, the Dow need to slump below 8500 significantly (another 5%?) and on strong volume. This is why I would not be surprised to see the Dow actually rebound a little tomorrow. The Dow remains in a short term neutral trend and a primary bear trend with breakout inclination to downside.

That aside, the economy does seem poised for recovery even though this quarter's earnings and the coming GDP is going to be nasty. Oil and commodities price is once again at very low levels and would definitely help stimulate aggregate supply when banks start lending money to companies again. Consumers still look very healthy especially with the way they are snapping up the new Google phone today. Consumers are looking for good value right now and that would definitely help to improve use of resources in the economy through the elimination of low quality and low value for money products. The invisible hand is once again at work clearing trash from all industries from the economy and would definitely help the global economy in the long run.


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