DJI chart…a longer term view
Posted by MC on Jun 4, 2009
That red level would push us to fill the long wick on that wild candle down. That’s market excess and there’s lots of pain/supply to be found in that dead cat bounce area.
If we hit mid 9000’s and show rejection on the tighter timeframes (daily, 60 min) I’ll be unloading some more of my 401k into stable value funds as planned. That’s the area I could foresee capping this rally.
If we pierce into that red supply zone I could see investing but with a trade style stop. Once inside that range we MUST hold or I would run to the hills as they say. Though all in all I think one is nuts to buy long into all this supply. Bulls either bought awhile ago or they should wait and pray for supply to prove broken and buy new found support. The support would be the top of the red zone and should be confluent with the bottom line of the downward sloping channel. Simple as that IMO. 
I’m not saying longs can’t squeak more $ out of the rally, just that the upside to downside risk is rather bearish at this point.
