This Rally Might Still Have a Chance

This rally almost fizzled. Yesterday's Dow drop brought it under Nov 20 low and under 50 days moving average. Things aren't looking good. But one critical level is holding: the Dow is still over its 13 days moving average.

It still doesn't look good. I was looking at 1932, and the July 1932 rally ran over its 13 days MA for more than 2 months, crossing on the way over the 50 days and 200 days moving averages. Now the Dow is under 50 days MA and a long way under 200 days MA.

But there is still hope while the 13 days MA isn't broken. Today is a critical day. If the Dow manages to stay over 13 days MA, the rally still might have legs. If it closes under, the rally is over.

I am not happy with this rally. It looks pretty much like a typical bear market rally. But one thing was giving me some hope: sentiment was and still is extremely bearish.

Gold looking bearish. GLD closed under 50 days moving average yesterday, and that's after picture-perfect head and shoulder formation. If GLD closes under 50 days MA today, it might be good time to short.

Full disclosure: At the time of publication author did not have positions in GLD. Positions can change any time.

Comments

[Jason Z]

This rally is a trend reversal, of course it still have a chance.

2009 Mar 31 11:39 AM

[aware]

This is a fake rally,or you can call it a suckers rally.Get the guns and get ready.Can you handle the real world?

2009 Apr 01 08:34 PM