Dow In Danger
From Deron Wagner this morning:
Unlike the S&P 500 and Nasdaq Composite, notice the Dow failed to even touch its 50-day MA last week. More notably, the Dow has already sold off down to the area of its January lows. If the Dow loses just 100 more points, closing below the 7,900 area, it will break support of its January lows. A breakdown below that level will likely trigger a wave of downward momentum that causes the Dow to quickly tumble to its November 2008 lows. If that six-year closing low of 7,552 is violated, the market’s price action could get pretty ugly again. On the plus side, the S&P and Nasdaq are still several percent above support of their January lows, which could help prop up the Dow. Nevertheless, we now recommend a very cautious stance on any long positions correlated to the direction of the broad market.
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