Dow 30 Trendline Break
Click on Chart to Enlarge
The Dow 30 has broken its Oct 2011-June 2012 uptrendline and held below it for 3 days. This is early confirmation of a completed rising wedge TOP chart pattern. The daily MACD lines are just crossing below 0 after a bearish divergence suggesting that the MACD could get significantly more oversold before it would be screaming for a rebound in prices.
Often after a wedge trendline breaks, price will back test the line. So we may get a little more downside followed by a sharp rebound to test the broken trend line.
The S&P 500 is just hovering at its trendline today. Over the intermediate term it still appears to me that more downside is in store, but be prepared for a possible rebound that may offer an outstanding short-selling opportunity.
