While my charts have been working (not much today) I started doing some tinkering with the Dow Industrials and Diamonds (DIA). I think it's a little early to be looking long the Diamonds here, but subscribers know I'm usually lining up trades days before we actually take action. The reason for this is that things move fast and I want subscriber to have an idea and perhaps a wish list of things to be looking for. One think I'm wondering today is, "why did the Dow Industrials stop their decline earlier today near 9,157 and is that a short term bottom?" When I look at a chart of the Dow Industrials, this is what I see.
Dow Industrials Average - last eleven months
I think the Dow Industrials "stopped" at 9,157 just due to some gravy short covering by bearish traders for many stocks in this index. I think there's a little more downside short-term near the 61.8% retracement level and some good psychological support near 9,000. At that point, I like the risk/reward for a bullish trade in the DIA (Dow Diamonds). What I'd do is risk a 1% loss from 9,000 and be targeting the 9,500 level (50% retracement) to the upside for a good bounce.