DJIA 2/15/08 WEEKLY MARKET REVIEW

PRICE AND TURNOVER
Close: 12,348.21
Change: -28.77 / -0.23% (Daily) +166.08 / +1.36% (Weekly)
Volume: 691,046,016

MARKET BREADTH (NYSE)
Net adv/dec issues: -364
Net new highs/lows: -110
Net up/down volume: -78,283,796

TECHNICALS
Trend: Major trend sideways, intermediate downtrend, short term downtrend
Support and resistance: 12,000 / 12,800
Price pattern: A symmetrical triangle is developing in the intermediate trend and a range pattern has unfolded in the major timeframe.

OUTLOOK
The Dow opens below the previous close and ends the day on a downtick. The index remains under selling pressure until the buyers take control at mid session driving prices well off the lows yet failing to close higher. As technicians, we know that patterns appear in all time frames. Intraday, we see the market develop a potential rounding bottom and end the day on an uptrend so it is not unreasonable to expect a continuation of this advance on Monday. If the rounding bottom comes to fruition, the height of the pattern opens the possiblity for a 100pt move to the upside on an intraday basis providing a profitable trading (indexed ETFs) opportunity for day traders.

On the daily chart, we see both the intermediate and the short term time trames on a downtrend. Nothing much has changed when I said in my recent posts that i could find no evidence to challenge the validity of the current trend. I also took notice of the developing symmetrical triangle in the intermediate time frame and mentioned that this could be reasonably expected to be resolved to the downside for two reasons: (1) because the downtrend remains valid, and that (2) triangles are typically continuation patterns that resolve themselves into the direction of the prevailing trend.

Moving on to the weekly chart, we see that the major trend has developed a range pattern within the bands of 14,200 and 12,000. The intermediate downtrend has driven the index very close to the major support level which we could see tested as soon as the symmetrical triangle breaks to the downside. The magnitude and the duration of the range makes it very significant. The height of the pattern offers a potentially huge drop of up to 2,000pts if a valid break of the 12,000 level occurs. We should all be watching this very closely.