Pullback Starts...

The Dow retreated almost 200 points today as I have anticipated yesterday in continuation of its intermediate neutral trend. The quality of this pullback is extremely important technically. If the pullback does not make a new low relative to the Nov low, then it would reinforce the neutral trend and increase the possibility of a bullish breakout but if it does, it would break the neutral trend and resume the primary bear trend. Changes within the framework of an oversold primary bear trend is always tricky especially around critical support levels such as this one.

Bond traders played it safe today by staying relatively still as the auto bailout becomes shaky. Well, economics has its way of eliminating the less efficient and effective and human intervention does nothing but prolong the pain and delay in the inevitable, resulting in more uncertainty to the market and their workers.