Confirmed Bear Market

Brutal start to the week. Charts confirm bear market.

DJW daily line chart (click charts to enlarge):



Downtrending channel remains intact. Right at the trendline support from Aug/07. A break below takes us to the August low at 277.17, below that the July/07 low at 270.73.

DJW PNF 1 box:

Bearish with a revised price target of 263.00

DJW PNF traditional:


Bearish with a price target of 256.00

DJW 10 Year weekly line chart:



Key to note that as of today the 13 week ma crossed below the 34 week ma. This has confirmed the bull market that began in 2003 is now complete and we are heading lower from here.

The only ray of hope is currently price is right on the lower trendline that forms the channel from 2003. It may hold support at this level for a bit (or even go a bit higher) but ultimately (based upon momentum) I think this trendline is going to be violated to the downside.


Bottom Line:

I will be switching the last 25% of my equities position into the Fidelity International Bond Fund. As such, my positions (as of tomorrow) will be:

-Fidelity International Bond fund 50%
-USD cash 25%
-Euro cash 25%

For those who have "shadowed" my moves; looks like you did well and you are safely in cash and bonds. For those who did not, note the market is severely oversold at this point and I do expect a "relief rally". It may be a time to consider repositioning out of equities and sell into the strength.

I still am very optimistic for the end of the year. In fact, more so now that this selling has taken place. I will be looking for a bottom some time in the Apr-Jun period at which point I think the market will rally strongly into the year end (as per my forecast previous). However, I will not try to "front-run" the move and will let the charts tell me when the time is right.