The so-called follow-through day of exactly one week ago did what most follow-through days do – it failed. For the bulls this creates more of a mess of this market, while opportunistic shorts have prospered over the past few trading days since the FTD. In the process, both the Dow Jones Industrials and the S&P 500 Indexes broke near-term support, with the Dow dropping below its 50-dma while the S&P gave up the ghost at its 200-dma on Monday.
Both indexes dropped further yesterday and today, with the Dow closing below its 200-dma today on heavy selling volume. Volatility was crazy today, however, as the Dow plummeted over 350 points, then rallied back near the unchanged line as we moved into the final hour of trade. The index could not hold the late-day rally and slid back to the downside, ending the day just below the 200-dma as it appears headed for a retest of the late-October low.
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