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Dow Industrials turn red

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Much like a strutting tom turkey's head in the height of a fashionable strut, the Dow Industrials have turned red and now trade down 87 point. The turn came rather quickly and was lead by a quick sell-off in shares of J.P. Morgan Chase (NYSE:JPM), Honeywell (NYSE:HON) and Dupont (NYSE:DD). These three stocks have very little in common other than they are Dow components and this move right now looks like profit taking. Earlier in the session on PremierMarkets.com hot list we did note that the banking groups looked to be the weakening earlier this morning, but the action that took place in some of the bigger institutional banks didn't really pick up until the last hour.

Dow Jones Industrial Average Chart - 60-minute interval

Any time an index that I rate in my mind as technically strong shows some rapid weakness I become alert. Last week we talked about the big run this index has had and that it might just be time for it to take a breather. Currently, the action in the Dow Industrials looks like profit taking and not that much to get concerned about. I'd consider a pullback to the 10,116 level a good buying opportunity. Earlier today we displayed a point/figure chart to help give traders a good feeling that the Dow was above the upward end of a channel on that chart and could be susceptible to a pullback. It would take a trade at 10,350 to get this index on a sell signal. Again... current action looks like some profit taking, as risk/reward at 10,800 was getting unfavorable for the bulls.

Jeff Bailey
Senior Market Technician

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