Bears Out of Hibernation
The bulls could barely muster a feeble bounce on Friday, especially after the Dow was down 9 straight days, something that does not occur too often in a bull market. Keep in mind, however, that those 9 down days only amounted to a 3.4% decline which is basically one or two bad days. Additionally, as you can see below, the Dow is once again visiting its average price of the last 200 days, more affectionately know as the 200 day moving average.
As many of you know, there is nothing magical nor special about the the 200 day moving average except that it is widely watched as a gauge of the long-term trend. This is the third time this year that the Dow is visiting it. The Dow has been the weakest major index and this could be the beginning of the end for that underperformance.
Looking at the other four major indices, none of them are even close to their average price of the last 200 days which can be good or bad, but I think good in this case. In the very short-term none of the major indices look to be at their lows just yet and opening indications are for an ugly down start to the new week. Seasonally, this week is negative which continues the trend from last week and right to quarter end on Friday. In all likelihood, stocks should trade lower before they bottom, but there is a good chance to see a low in the next 5-7 trading days.
