The Dow continues to trade in its downwards channel. As the chart below shows, each cyclical top has been followed by a lower low. The key as to whether this pattern can be broken would be a higher low (in circle with “?”), possibly leading to a break of the upper downtrend line.

Dow Industrials (Feb – Oct 2004)
click for larger chart
Source: Arms Advisory

The sharp downward move has penetrated the lows of late September. The vertical blue lines indicate the very regular cyclicality of the tops. The ellipses are indicating the bottom of each cycle.

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Quote of the Day:
The test of success is not what you do when you are on top. Success is how high you bounce when you hit bottom.
-General George S. Patton

Category: Finance

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