Market Falling Apart

It’s getting pretty hot wearing this bear suit for the past few days, and it looks like I’ll be keeping it on for a while. Today’s action was very disappointing for the bulls. The “self-proclaimed bounce” was a nasty failure. The Dow was heading to triple digit gain, and every financial website had the headline “markets rebound.” Ha! The market gave up in the second half of the day.

So where are we at? Well, I have the S&P 500 and Dow showing we’re in dangerous territory. (I finally figured out how to use StockCharts.com’s annotation tool, but I have to figure out how to display them on this blog. Sorry, the charts are tiny. Try clicking on them)

Bad Sign- The Dow shows a bearish head-and-shoulder pattern has formed, and it has actually crossed over support (which happens to be just above 11,000- not surprised). All other indicators show it to be oversold at levels we haven’t seen since November. But before you conclude that we will see a big rally just as we saw in November, we have to realize that it’s different this time. Buyers and bargain hunters are reluctant to go all-in because we still have FOMC and Bernanke to deal with… until June 28.

Bad Sign Again- I don’t know what happened to this image! Sorry, I’ll redo all this when I get home. Anyway, I just wanted to point out that the S&P 500 is testing the MA 200 for a second time. This will be interesting since you have to wonder if those who bravely bought at the first test will see this support as the next resistance. In other words, we may not see that much firepower this time.

Well, just keep this in mind, trading will be rough for the next few days, that’s all I can pretty much say.