You think this is bad? Here comes the 200 day MA

Ouch! Five straight down weeks.  Now six straight down sessions, and unless we can pull off some significant gains in the next two days, it's going to be six straight down weeks. Double ouch!

Beware the 200 MA

But if you think that's bad, check out what's coming next.  We're now at the point where the Dow's 200 day moving average is coming into view.  And if we go through that, then it's look out below.  Here's the daily Dow chart.  In this chart, you can see the 200 MA as the dotted orange line rising slowly up from the bottom of the chart.  You can also (obviously) see the steady downward march of the Dow since the start of May.

This presents an interesting opportunity.  If we extend the descending regression trend channel the Dow has been in for over a month now, and extrapolate the 200 MA out from today, eventually they will cross (the rising blue line).

And when does that happen?  Any time between June 21st and July 1st, assuming the Dow stays within the same RTC and depending on where it is inside the channel at that time.  So unless we can end the current down trend in the next two to three weeks, we are going to hit the 200 MA.  And that usually does not bode well.

The last time this happened was on May 20, 2010, a day the Dow dropped a whopping 372 points.  Check it out (remember the months in this chart are from last year).  This year's recent pattern looks a lot like last year's just before we hit the 200 MA.  Even the time of year is nearly the same.

Even the issues are the same.  Last year it was the Greek debt crisis, this year it's the Greek debt crisis.  And just like the Croaking Chorus from The Frogs by Aristophanes, this issue is irritating and you just wish it would go away.  But apparently, the Europeans are bound and determined to drag out the agony as long as possible, like slowly peeling a bandaid off a hairy arm.  Ugh.

The John Hopkins Newsletter, 10/15/04

Waiting for Godot

So what about tomorrow?  Honestly, after so many days of technically oversold conditions, waiting for this downturn to end is beginning to be like waiting for Godot. Will tomorrow be the day he finally arrives?  All the indicators say so, but we've been down that road for days now.  The VIX  is at the upper end of its range and should go down, but doesn't.

The ES is now (at 1:45 AM EDT) up 0.27%, but we've seen futures higher before, only to see those gains evaporate the next day.  If it isn't those pesky Greeks singing brekekekek, it's Ben Bernanke.  If it isn't isn't Ben Bernanke, it's OPEC.  Or lousy job numbers.  The gloom on Wall St. has reached a point where any excuse to knock 'em lower will do.  I think we can pretty much write off having a winning week.  I just want to know when we'll ever have a winning day again.  As I wait for Godot and wonder if tomorrow's the day.

And if we don't get out of this slump by the last week of the month, things are really going to get ugly.