grant and other flower sniffers. Draw a long-term trend line...

grant and other flower sniffers. Draw a long-term trend line under the DOW for the last 12 years or so. What do you see? (If I knew how I'd paste a picture of it but others have done so many times before). The DOW has turned down and is clearly in bear mode. As I pointed out yesterday the 50 day moving average has crossed over the 200 day moving average, transports have confirmed a while ago and few would argue that the trend is down.

Where will it stop? Sept low comes in around 8,050 or thereabouts, there's no doubt in my mind that we will test that low but the real support kicks in around 7,500.

If you draw a horizontal line on your chart at 7,500 it will intersect the trend line directly below where the chart is trading ie around this time. In other words if the DOW were to drop down to the trendline today, it would drop to 7,500.

I have no way of knowing how long this bear market will last but the statistical nature of trend lines and the concept of reversion to the mean implies that at some stage sooner or later the value of the DOW will once again meet the trend line. Clearly, it can do this either by falling or hanging around in a trading range till the trend line catches up. Given that the trend is already down surely the probability must be that the DOW will continue to fall until it meets the trend line. I suggest that will be at a point well below 9000 and closer to 7,500-8,000. This by the way, may well be an optimistic scenario.....
G