Tomorrow could be a rough day
It would be normal to accept a few hundred point loss after the Dow rallied for 889 points today. The close of the market does show some weakness, in that it touched a trendline that has held the market down for the better part of the last month. With no significant movement through the line today, and little evidence the rally is going to continue, the next few days might just kick off a heavy sell off.
This trendline is no weak line, its shown extremely strong resistance to any rally and and has been largely responsible for keeping the market at the bottom. Its nice to see a well formed bottom at 8200 but also some horizontal resistance at 9200. This market is bound to trade in this trading range for quite some time without any big catalyst to send the market upward. Falling through 8200 won’t be nearly as difficult as upward through 9200, this market simply has more selling than buying.
Market open above this trendline will spur a large rally. Below the trendline will put the market back into the already formed trend to continue on the same path it has taken for the last month. I’d be willing to buy above 9200, but ready to sell if tomorrow does not bring a breakout. Selling pressure tomorrow will likely be strong, investors are going to lock in any profits that they can, especially in a market like today’s.
