“All things considered it wasn’t too bade a show yesterday even though we ended with a splash of red. We are still in a short term bounce mode so we keep watching that the Dow Theory is holding true. For this to be the case we must not see a print below 4199.5 to keep the pattern of higher peaks and troughs. Things may get spoiled technically as we go into the Christmas roll after a very difficult year. Whatever happens we must remind ourselves that in the bigger picture anything up to our Fib Retracement level at 4855 is just a bounce and not a long term trend reversal.” There is basically no change to yesterdays comment but do remember the rollover!


Indicators in Play

Charles Dow defined the basicprinciples of a Bear market as one that is producing lower peaks and troughs on each swing. The opposite applies in a Bull market. Fibonacci introduced his sequence of numbers to mathematics back in the 1200’s. These numbers appear in all walks of life but have an eerie influence on trading. We use the 38.2 level as an indication of the strength of the correction or indeed if the longer-term trend has changed.



We are still with the Bulls in the short term but our stop now is just below 4199.5. If the bounce continues as we hope we shall be extra vigilant as we approach stronger resistance such as 4688. No change here!