DJIA Off 500 Points, Nearing Corrective Territory
In the event the DJIA plunges beneath 24000 for any period of time, the two-year Trump rally in U.S. equities will officially be over.
There is selling and then there is selling. The DJIA is running to the bear quickly, posting a session loss of more than 550 points. Values in the December E-mini Dow futures are tracking the action and are in a position to challenge Thursday’s lows. While there is some time left before the closing bell, the situation appears dire.
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One level to keep an eye on for today and early next week is October’s low (24086). This level is just above the 24,000 big-round-number. In the event the DJIA plunges beneath 24000 for any period of time, the two-year Trump rally in U.S. equities will officially become a correction.
Overview: In the days to come, I will break down the long-term uptrend of the DJIA and take a look at the key levels facing this market. However, from a price action standpoint, the picture is bleak. The DJIA is off more than 9% from October highs and gaining bearish steam. With the FED poised to tighten later this month, a trade deal with China in doubt, and the seating of a newly split Congress due in January, the liquidation of stocks may just be beginning.
Today’s close will be a biggie. If we don’t see bargain hunters step in and stop the bleeding, Monday morning trade will be “cautious” to say the least.
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