Buy on dips

I apologize for not posting over the past 2 weeks.

Things to note: The DJIA bounced off of the Fib retracement I had at 10930, calling an end to the short bear retracement I'd called.

Since then, we've rallied - big time! All looks strong, but I'd caution against taking massive long positions here as a sell-off for whatever reason (probably profit taking) will most certainly ensue in the near future without many more points on the upside. If you do decide to go long, have some tight stops in place. The stochastics show an overbought market but given that we've broken to the upside, the range has been broken and we're now in a trending market. Thus, stochastics can't be trusted as much.

The strategy here is to buy on dips as I believe the risks to the downside are contained.

Bears make money, for now

Friday's action was important. After being up about 80 points, the DJIA gave up all gains and some more. This action was very predictable as I've stated in the past few blogs.

I expect the downtrend to continue, at least for the near-term, or a consolidation. The MACD remains negative, while RSI is showing a market approaching oversold levels, but not yet.

Notice the overall trend lines: Overall upward channel, with a current downward channel.

My take: continued downward pressure / consolidation here. Still bearish. Watch the 50-day MA as a possible support level.