The global markets including the Dow Jones (^DJI) have been dropping since May 13, 2010. The ^DJI has dropped more than 900 points to 10,068 after reaching a high of 11,300 all because of the negative sentiments towards the euro zone, particularly in Greece.
Over the short term, the index appears to be headed downward towards the support line of its ascending channel (violet dotted line) which is around the 10,000 psychological level. In case the index breaks below 10,000, there is another significant support around the 9,700-9,800 area (red dotted line) which could hopefully keep the index from sliding further. In any case, for it to continue its ascent, it must move past this years high at the 11,300 level. If it does not, we could see a potential head and shoulders formation and we all know what that signifies especially if and when it breaks down from that pattern. A breakdown from this formation could suggest a double dip recession. Still, I remain somewhat bullish on the Dow Jones since its ascending channel remains to hold at least in the mean time.
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great article and a very, very good blog.