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Bulkowski’s Blog Archive: ^DJI

Blog Posting: February 4, 2008, Dow Down From Here (^DJI)

The chart shows the Dow Jones Industrial Average with Fibonacci retrace values highlighted. They are the three red lines at 38%, 50%, and 62%, and they mark the upward retrace of the move from A to B. The lines represent common reversal points. So far, a reversal hasn’t happened, but we are right at the 62% line after a week of strong gains. Based on this and other charts, I sold a stock this morning (Charlotte Russe Holding, CHIC), expecting a short term reversal to occur.

Of course, the Dow could continue rising and the next turning point would be 75%. However, if that were to happen, I would say that the bull run is intact, and I would have to look for the next turning point.

Aftermath

As the chart shows, the Dow touched the 62% retrace line and then tumbled, climbed again to the 62% retrace line and then moved lower. What more is there to say?