With the 8000 support level succumbing to downward pressure, the bottom targets for all 3 major indicies has to be revised downward. In my article "When Will the S&P 500 and Dow Jones Bear Market Hit Bottom?," I made the predication that the bottom would come around May, 2009. I made that prediction with the belief that the S&P 500 would hold at the 800 level, and the DOW would hold at 800. With these critical levels looking to be broken on the weekly chart, it is time to figure out new levels of support for the bottom.

Check out the video: "How Low Can the Dow Go?"

First I took a  look at the trend for the DOW. Clearly the trend is down, but we want to figure out whether or not it is going to continue. There is a very bearish signal showing on the accumulation / distrubution where the line crosses below a 26 week moving average. This is the first time in over 5 years that any cross of this line has occurred. Second, the ADX is showing the down trend gaining strength. Any reading above 25 is considered a strong signal

Trend:

Price Target

So whats the price target. The chart is showing that we broke to the downside of a continuation triangle. The top of the triangle to the bottom is approximately 1300 pts. 1300 points below the the bottom of the triangle at 8000 puts us in around 6700 on the DOW. So the projection is 6600 – 6700.

Last 5 posts by Steve Warshaw

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