Looking at the Dow Jones at the moment, it appears that exhaustion is starting to come in on the downside. I have thought that that markets were overdone on the long side for a while now and have been of the opinion that the market could be going lower. The lack of conviction with the downturn is turning into the possibility that this is nothing more than a consolidation pattern. The 200 period moving average that was strong resistance mid last year, now could have the ability to be strong support. The level of bearishness out there amongst traders suggests that a lot of people are already short. Unless we see some major changes in the index over the next couple of days we could see a break of the trendline and the market move to the longside to complete a fifth wave.
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