Stock Market Pattern: Same as January-February Sell-Off?

Yesterday, we saw DOW Jones Index break its 200 day simple moving average at 10,258. This is very significant because many stock traders and stock analysts believe that 200 day simple
moving average is the defining line between a bull market and a bear market. In Dow Jones Index, there seems to be a support at 9,900 so we should expect it to reach there soon. Unless of course we are going through another bear trap just like we experienced so many times…

For NASDAQ, we are currently near 200 day simple moving average at 2,221, which is above its critical support level (2,200). If NASDAQ trades below this critical support level, then the next target is 2,125.

Just like DOW Jones Index, S&P 500 also broke the 200 day simple moving average at 1,102 and critical support at 1,100 yesterday. The next support is at 1,050.

There is a strong possibility that we could see the similar type of recovery in February through April mainly due to the similarity in the decline we are currently experiencing compare to January and February. Investors should be prepared to catch the ride up if this indeed comes to fruition. However, if there is continual breakage of the supports, then the probability of repeating the pattern becomes slim. Keep a very close watch on the support level. DOW Jones Index at 9,900; NASDAQ at 2,125; S&P 500 at 1,050.

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