Here's a chart that I have been following recently. INDU has a bearish wedge look to it. I have it drawn as a long term wedge, but it could also be drawn as a wedge from around July. This would make it more reflective of a rising wedge pattern as it would then be a continuation pattern portraying a possible reversal since the Dow bottomed. These type of wedges can be very difficult to spot, but this is the feel that I get from INDU.

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"The heights by great men reached and kept, were not obtained by sudden flight. But they, while their companions slept, were toiling upward in the night." - Longfellow

The markets seem to feel very toppy. When FAZ jumps up by double digits in one day, when almost every big board stock is down at least 6%, and when the Dow falls 250 points there is definitely reason for concern. Now here is a chart comparison of the Dow in the year 2003 compared to the Dow this year. Especially note the same rising wedge, the same crash JAN/FEB, the same lows for the year in March, and the last 3 candles on each chart while testing the 50 day moving average. Now it is almost lunacy to try to say that what happened in 2003 is relevant to now but the similarities are there. See charts and hope that what happened in 2003 happens again now. Note that in 2003 this period of 3 large candles (big red, big white, big red) was almost immediately followed by a massive rally for the rest of the year. I get the sense that is not going to happen in today's market but without a doubt the next week will tell us if it is time to cut losses and sell winners and go cash or to stay the course.....

I don't think anyone could tell these two years apart from a quick glance. Very similar!!!

2003:



2009:



Here is the chart in 2003 AFTER those 3 big candles and testing the 50 day moving average just like the market is doing now. The Dow rallied hugely from 9600 at the end of November to close the year around 10,570 which was just about the YTD high. See pic for complete chart: http://i106.photobucket.com/albums/m...2003wedge2.png

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Definitely think it's due for a correction. Only question is how far? On the weekly chart it's bumping right up against the 100ma. Even if you draw a trend line along the short term lows between mid August and now, it's sitting right even. If it violates that support and then falls below say 9500 which is sitting on the weekly 20ma where the bottom bounced off of in July, then it's a goner imo. Some say a correction to March lows. ie: a second leg down on a W pattern.. I don't think that low, but maybe a fraction of that if it goes. With the VIX getting higher fear readings last week, the selling could snowball once it starts though. Gonna be interesting to see what plays out.