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The Bottoming Process Progresses

I've update the chart you've seen in the last few posts for today's action.

Today, I drew the support line below the closing prices at 8,500. Part of the bottoming process is finding a support level that holds. This is a positive thing.

Also positive is that we had a move higher on increasing volume. Plus the On Balance Volume indicator has turned up.

What we are looking for next is a close above the downward sloping trend line, preferably on higher volume.

So far we have a classic bottoming pattern, we just need to move to the next stage – the big rally phase we all want to see so much.

UPDATE (I woke up in the middle of the night and checked the Asia markets and thought I'd add this paragraph):

The flip side of the coin is that October 24th is a key day in Elliott Wave Theory. It is a turn date in the projected wave, and the people that believe in it think that Friday could be a 2,000 point down day, bringing about the capitulation that we haven't yet seen. Elliott Wave analysis is a very subjective thing and I've never put a lot of faith in it, but I mention it because it did forecast the big turn downward in September that we are still in. If we get a big down day Friday, as Elliott Wave Theory suggests, then we'd want to see huge volume. Then, we'd want to see a big rally back to the 8,500 level on the Dow.

Hang in there…

Mark