The bounce we have been witnessing in the Dow has run out of steam and we are basically travelling sideways between our two key levels. These are 9025 to the upside and 8125 in the other direction. We are no longer making higher peaks and troughs (See Charles Dow) but this is probably more to do with the festive season and we should not read too much into it. We do have a closer support at 8242 and would be surprised if this were tested today. Its worth remembering that there are actually three trends in markets, the uptrend, the downtrend and the one we have here, sideways.
Indicators in Play
Charles Dow defined the basic principles of a Bear market as one that is producing lower peaks and troughs on each swing. The opposite applies in a Bull market. Sometimes we forget that there are three trends in markets. The up trend, the down trend and the sideways trend. The latter is where we should employ range-trading techniques.
Summary
Its time to take everything off the table and enjoy the break. Short term the Bulls are still going ok but the bigger picture still favors the Bears.
