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July 1, 2009 / Jeb

DIA Head and Shoulders, Time to Short

The market today moved up and tested the 20 day moving average and reversed.  This is showing us how weak this market is and giving me a sign to be prepared for a drop on the US indexes.  I hope this will not affect gold mining stocks but we need to stay monitored on how this correction in the US markets will affect gold investments.

The DOW as I wrote yesterday is creating a head and shoulders pattern.  Look at the poor price volume action on the head as increased selling occurred as soon as the index broke into a new high.  Now investors are even showing less interest on the right shoulder.  A break of this neckline will definitely confirm this pattern.

I believe another downturn in this market will force the FED to keep interest rates low and this will be good for our precious metals investments.

DIA

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