Correction time for markets 2010 - ref: Dow

As predicted in China's gift to the West - a double dip recession and using the Dow as an indicator, trading ranges were trading into a tight critical junction as volume was falling off. The move was going to be on the downside, particularly as markets rallied hard in 2009 and the first of the bad news and volatility began in January 2010.

We are now seeing a correction in stock markets.

If the Dow falls below the support of 9,678 trigger selling could send the index to July 2009 lows. A good dose of 4-5 mths of selling and a possible rebound in middle year. So watch for lows in the coming months and any aspects of stabilization. But on the fundamental side if things, the markets will react very negatively to companies earnings, consumer sentiment and deficit/sovereign debt issues Europe and elsewhere. Another aspect to watch is Asia, particularly China; which will also have an adverse effect of Western markets. Last but not least, watch for a global conflict, with North Korea and the middle east possibly being a flashpoint in 2010.



Always listen to your gut.

* MEC.research doesn't give investment advice, trade at your own risk