DJIA 2/17/09

MARKET SUMMARY
For the past 4 months, the Dow has kept itself within the confines of the Nov-2008 high and low of 9653/7449 establishing a sideways intermediate trend that appears as a correction of the Primary downtrend. The current short term downtrend culminating in today's close brings us to a precarious test of the lower limit.

ANALYSIS
For those expecting a bottom or even hopeful of a recovery anytime soon, then it would be best to watch closely at how price reacts at this important support level. If buying interest at or near 7500 is strong enough to halt the decline and produce a bounce, then it could set up a potential double bottom reversal pattern and fuel the hopes of the optimists. However, if support does give way to selling pressure, then it means that in the intermediate timeframe the direction has shifted from a sideways trend to a new downtrend.

OUTLOOK
Although unlikely because of the prevailing primary downtrend, a bounce off 7500 is POSSIBLE leading to a potential double bottom pattern that could spawn a reversal or an extension of the intermediate sideways trend. However, invoking the Dow Theory that a trend is valid until proven otherwise, the presence of the dominant primary downtrend makes it LIKELY that the average will break below 7500 and usher a new intermediate downleg that could precipitousy fall to around 6800 if we apply the measured move method. SELL on rallies.