Peter Worden's Blog

Here is a 3-Hour chart of the DJ-30 spanning back to mid-September. I have drawn a downtrend line connecting the October and November lows. As you can see, the DJ-30 is currently testing the downtrend line, which I believe will offer some very short-term support.

The dots illustrating the various (short-term) upswings and downswings are generated from the Parabolic SAR indicator to match this specific (3-Hour) time frame. The indicator currently shows the DJ-30 to be in a downswing, but I expect we could see an upside reversal here at the trend line resulting in a bounce, just as we saw at both the October and November lows.

I think this monthly chart of the Dow Jones Industrial Average, dating back to the late 1920s, offers some perspective on just how vulnerable the stock market remains at these levels. Most people find it almost unimaginable that things could actually get worse than what we’ve already experienced in recent months. However, I still believe the odds favor an unsuccessful test of the 2002 lows coming sometime in the near future. Whether or not the Dow Industrials will require the sort of unwinding which results in a bear market taking us all the way back to the long-term uptrend line drawn between the 1932 and 1982 lows remains to be seen, but we may have to consider the possibility at some point. In the meantime, let’s keep our focus on the November 2008 low, which correlates pretty closely with both the 2002 and 1998 price lows.

My volume-weighted MACD has been working pretty well (in recent days) on this 3-minute chart. Note the periods of green and red price bars and their correlation with the upswings and downswings. The DJ-30 is currently in the midst of an upswing, but can it last?

I do like the fact that twice today price tested and held at yesterday's closing level. Yesterday's close is illustrated by the light blue lateral trend line. However, please keep in mind, all of this is happening on a very short-term intraday chart.