The Dow's New Range

by: Alex Filonov

Dow Jones index quietly moved below the November 20 low on Friday. On slightly below average volume at that. Technically what we see right now is as bad as possible. Remember, in November the Dow only spent two days below 8000. Now it's sitting there since February 11 without any intention of going back up. It's going down mostly slowly, but surely.

Looks like Dow is settling into a new range. In October, we saw it in 8500-10000 range, since November, in range of 8000-9000. Now it's in 7000-8000 range if we are lucky.

Just amazing how this is similar to Dow's behavior in 1929-1932. Same picture: drop, oscillation in range, another drop, another range.

But there is a silver lining in current storm. There are almost no bulls in media right now. Probably they are sitting licking their wounds. Good. That means when the current range is settled, we will have another period of range trading. I'm almost optimistic. Just remember that every cloud doesn't have a silver lining, though every silver lining has a cloud.

Random musings: who is buying all that gold? If Indians are mostly out of the market, who replaced them? Maybe China quietly buys gold instead of Treasuries? Unfortunately, no way to know right now. We'll find out, eventually. Of course, China can't completely retire from Treasuries market, but they might redirect just a little bit to gold, and that'll be enough to cause the current bull market. Pure speculation on my part, of course.