No Breathing Room for US Markets

In yesterday's update we mentioned that the Dow was on life support at the 50% retracement level; well, if the Nasdaq's action is any indication today, we are going lower over the short-term.  Many traders and analysts were saying that Tuesday's rally was the beginning of a bull market, but any technician could see this dead cat bounce a mile away.  The market basically had two inside days after the debacle.  And if you have been around long enough, inside days are often a pause in the primary trend.  As I write this post, the Republicans are roughly 12 shorts shy of passing the bail out bill.  If this does not pass, we will see an all out crash on the market.  But before we attempt to decipher the news, lets take a look at the charts.

Dow - Not Much Left in the Tank

As you can see from the Dow Jones chart below, after the nearly 800 point bath, we had a one day bounce, then a flat day and are now right back near the yearly lows.  Tomorrow sets the stage for one of the worst unemployment numbers in a while which is likely to push the Dow through Tuesday's morning low of 10,371.50. 

Nasdaq Making Fresh Yearly Lows

The Nasdaq figured it was best to just get it over with and broke Monday's low.  This low was broken on lighter volume which is an early sign that the downward momentum of the market is weakening.  Stay tuned....