DJIA 11/12/08

* PRICE PATTERN. The index breaks out of the 4 week triangle. The magnitude of the move is significant because it is about 3% below the breakout point although the accompanying light volume suggests less than broad market participation. A 2 day time filter would require the index to remain outside the pattern for another day before confirming the validity of the breakout. The size of the pattern insinuates a 2000 pt drop to around 6600.

* SUPPORT AND RESISTANCE. Notwithstanding the pattern breakout, the average remains inside the range of the important reaction levels 7773 and 9794. The direction of the above breakout brings us closer to a test of 7773 where it is reasonable to expect considerable buying interest from traders who are vested in that price area. For now, 7773 becomes an interim price target.

* BOLLINGER BAND. Indicated yesterday as an interim TP, the market is now within grasp of the lower extremity of the band. It is not unreasonable in these overstretched situations to see a near term snapback to the 20d MA before resuming the downtrend.

* SUMMARY
The next critical level is the major support of 7773, for now, this becomes the interim TP. If price bounces off this level, we could be in for a longer basing pattern. If this gives way, 6600 kicks in as the subsequent price objective. The important trends are declining. SELL.