At this stage of the market development when almost all the major bourses have dropped close to 50% to 60%, we should not worry too much if we are going for long term investment except to watch out for the slim possibility of the recurrence of 1929 great depression. The main question now is whether the market is taking a pause before the next plunge or it has already developed a base for its side way consolidation phase. I still think that Dow is in a major A-B-C-D-E consolidation phase according to Elliott Wave that can last about 5 years. We are at the begining of Wave B at this juncture.
Look at the 30 days candle stick chart for Dow that I borrowed from Yahoo, even though it has gone below 8500, it is still above its last low of 8419 0n 23 Dec 2008. Last night Dow formed a Doji candle stick, which is part of a reversal pattern, hopefully Dow will reverse tonight to complete the reversal pattern. We have to be careful about this Doji candle, Doji can be found at most of the turning points but the present of a Doji not necessary means that the market will turn. It merely indicates a possible turning point when buying and selling are almost balanced.
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