The End of the Fall?

Hey y'all:

A quick post for this morning on something I noticed yesterday. I looked at the "Big Picture" on the Dow yesterday and discovered something VERY interesting. Take a look:

This is a part of the 5 Year chart. You'll notice that the index was traveling beautifully inside an Ascending Channel until about October of '05, at which point it broke above the channel. I then have two "minor" Channels above the "major" with the most recent one being somewhat tepid, or less steep. This indicated that the trend was losing steam. Of course we all know the WALLOP the market gave most of us last week. The question on ALL of our minds was, "when will this end?"

It may have ended now.

See the way the index "bounced" of the top of the "major" channel? Pretty amazing huh? Remember gang, previous resistance becomes new support when resistance is broken. That is exactly what happened here.

What does it all mean?

Well, it may mean that the "correction" has ceased, but I can't be certain. If we see a greater move up from here we need to be careful. In order to continue the Bullish trend we need a Higher High. I am not sure we will get it here as the market may sideways trend here for a bit before deciding what it want to do. Yesterday may also have been a "Dead Cat Bounce" (I didn't make the term up for all you cat-lovers), which is a "short term spike after a tremendous downfall." Basically a DCB is a Band-Aid on a major wound giving temporary relief to the Bulls. The fall may not be over yet, be careful!

Some ideas. I "dipped my toe in" to test the market by opening small positions in the following (not a recommenbdation to buy):

BHP
CLF
GRMN
PCL
PICO
SWK

Happy Trading!