Evening Star Pattern in the DAX Prefigures Drop in the Dow

October 16, 2009 – Traders on the USA Exchanges pushed, shoved, grunted, and shoved some more, but it didn’t work. They wanted in the worst way to make the Dow Industrials close above 10000, all to no avail, as the Dow closed at just below 9996 today.

So we’re still beneath that psychological barrier. It’s only a number, but plenty of investors take it seriously.

We could almost tell that it was coming, as the German DAX Index closed lower (earlier than the USA Exchanges, of course), and left in its wake a beautiful, bearish Candlestick “Evening Star” pattern. The DAX does not control the USA markets, of course; but oftentimes it is an accurate predictor of that which follows in the US, so we do take notice.

We think that there is now a very good chance that the Great Rally of 2009 is overwith. Nothing is certain, of course, but it does seem possible that a blowoff top was made yesterday (with dynamic, euphoric action in the last minutes of trading) and that the turn down began today.

If this outlook is correct, today’s move is the precursor of a very strong downmove which will take prices far below their lows of March 6, 2009, and represents the re-emergence of the underlying bear market which has been in effect since October 2007 but which has been in hibernation since the lows of March 6, 2009.

Look out below!

William Kurtz
October 16, 2009

http://www.candlewave.com

http://www.candlewaveblog.com

http://www.candelaabra.com

http://www.candelaabrablog.com