Neutral Trend Continues...

The Dow retreated from near the top of its neutral trading channel by 245 points today due to dismal job loss number, continuing its short term and intermediate term neutral trend. In fact, from the market action over the past 1 month, we could see a strong short term resistance level at around 9000 points. The Dow retreated from 9000 points twice before; On 9 Dec and 17 Dec. Short term support level is around the 8500 points level. From the market action today, it seems like investors are pricing in a worse than expected unemployment number for this Friday's Job Report already (see economic calendar), as such, I would not be surprised to see the Dow actually hold up above 8500 points even if unemployment rate turns out higher this Friday. Consensus is for unemployment rate to go as high as 7% to 7.1%. Personally, I would expect unemployment rate to go above 7% during this crisis due to continued job cuts in the private sector. When that happens, we could see a real bottom for the stock market.