Price Action Goes with the Trend

The DJIA, S&P, Nasdaq and Russell all four broke Friday's support in early trading. Look for these indices to fall to their next support. Once again the trend follows through. Of course "trends don't always follow through, they just do so most of the time." That is why the old adages are: The trend is your friend. The trend is your friend until the end. The trend is your friend until a new one begins. Once support is broken it is probable (not a certainty) that price will fall to the next support level. The paradox here is that statement presupposes the "next known" support level. The reality is that price always falls to the next support level. Yes, I said always! Of course the paradox is that the next support level is not always known, but price always bounces at some "next" support level. It just may not be the next visible support level. Since a technical trader can not know with a certainty where that next support level is, it is desribed as being probable, not a certainty. Okay, okay, we know that for some of you what just we wrote is too philosophical. If it is, just let it soak...come back to it a few times and then at some point the light will go on and you will have that epiphany. Let's just review, this morning's support break is significant. It was known that since the trend was down it was more likely to break, than not. There are new price targets on each of the indices, which we have posted over the past week and we will repost them a little later this morning. Early Morning Action Moving Up: (very little) IPI, GS, BTU, X, USO Moving Down: (a whole lot) BIDU, MA, MON, CF, POT, SOHU, STRA, MOS, DECK, RIMM, AGU, AMZN, PCLN, SCHN, CNX, MTL, FSLR, V, FWLT, ESRX, CLF, IBM, MEE, GRMN, MER, NKE, DRYS Since we are waxing philosophical this morning, one final thought until a little later this morning, (which means temporarily final), just because it is moving down, doesn't mean it is down trending. Dave's Insight: One of the primary responsibilities of a trader is to determine the difference between price fluctuation and trend change. Let's get back together a little later this morning...