We have a Dow Theory confirmation

The Dow Industrials and Dow Transports have now made new lows for the year at the same time. This means that we have a Dow Theory confirmation that the trend has turned bearish.

What does this mean going forward?

Sell rallies until the market proves you wrong.....or shows you that it can hold support levels.

I think that this is what happens when you have Government involved with the markets. QE2 changed the way the market was going to naturally trade. We rallied and rallied and rallied without anyone thinking twice about buying it. Funds made a ton of money (if they were long) and everything appeared that it was back to normal.

On to tomorrow mornings unemployment number.

This could possibly make or break this market for the next month or so. If this number is bad we could be in for another sell off tomorrow. We broke all of the major support levels and we have a Dow Theory confirmation the trend is bearish. Not good for the bulls, really good for the bears.

The bulls better pray that this number is good and I mean really good or we could continue to sell off squeezing everybody out.

To all the newer day traders out trying to trade in this volatility;  remember to follow your trading plan and stick to your daily limits.  Remember to leave every day being able to trade tomorrow.  Have a good night.

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