The hits just keep on coming as the Dow Jones Industrial Average (Dow), the most popular US stock market index, closed below the 50%-retracement level.
Traders familiar with technical analysis know that when the price of anything falls 50% from a peak, it tends to be “supported” from falling further – but if this level doesn’t hold, the price could accelerate quickly to the downside.
The all-time high for the Dow was 14,198.10 on October 11, 2007. If we take half of that level, we come up with almost 7,100. Last Friday, the Dow closed around 40 points below this level – leaving many wondering what would happen on Monday. Well; on the first day of trading this week, the market was basically on a downhill slide from start to finish, causing the Dow to close at 6,763.29.
Now that we’re obviously past the 50% mark, what may lie in store for the most popular financial market in America? Probably nothing pretty.
Hold on to your hats ladies and gentlemen. My guess is that the wild ride will continue, as the US keeps rewarding crooked giants like AIG and speculators who gambled their ASSets away in real estate.
When will investors learn that the world does not revolve around stocks?!?!? Do I hear anyone say “forex?”
