The overall market as measured by the Dow Jones Industrial Average lost 430.18 points or approximately 5.2% to finish the week at 7,850.41 I've included in this week's edition of the Sterling Weekly a current chart of the Dow Jones Industrial Average that shows a continuation of the trendlines I published in the December 8th edition of the Sterling Weekly. The chart shows how the trendlines create a downward trading channel that appears to be influencing the activity of the Dow Jones Industrial Average. I've drawn in what I believe to have been a rough line of support roughly around 7,950. In "technical terms" the convergence of these two (2) trendlines would create what market technicians refer to as a "triangle pattern." The important thing to remember about triangle patterns is that they generally signal a big break from the prevailing/current movement; generally it would be either a very big move to upside or the downside.

If I am reading this pattern correct, which I believe I am, then what last week's trading activity is telling us is that the market is going to be making a big move to the downside. I wish it wasn't so, but it looks like the Dow Jones Industrial Average is going to test 7,522.29 on a closing basis, and if that level of support fails to hold then I would expect the Dow Jones Industrial Average to continue to move lower and test 7,286.27 on a closing basis. My guess is that we will know for sure if I am correct or not before the close of trading on Wednesday, as that is the day President Obama is expected to announce his plan to fix the housing market. Oh, and by the way, nothing I've seen yet from anyone is even remotely coming close to addressing the problems impacting the housing market which in my opinion is a failure of the CDO's to function as they were designed which is partly made worse by the government's attempts to prevent foreclosures. (more on that later.) So unfortunately I am expecting Wednesday's announcement to only make things worse. Not to be overly critical, I'll put my money where my mouth is and have my paper commenting on the housing market and what I think needs to be done in order to fix it out before Wednesday's market open.

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Dow Jones Industrial Average (INDU)

Current Opinion: Closed @ 7,850.41 Last Signal: Called Lower (again) with the close of 8,378.95 on October 24th. Current Expectations: We might see a short term rally however the Dow should continue to move lower and test 7,552.29 on a closing basis.

The S&P 500

Current Opinion: Closed @ 826.84 Last Signal: Called Lower (again) with the close of 876.77 on October 24th. Current Expectations: We might see a short term rally however the S&P 500 should continue to move lower and test 805.22 and then 752.44 on a closing basis.

The NASDAQ 100 (NDX)

Current Opinion: Closed @ 1,236.85 Last Signal: Called Lower (again) with the close of 1,202.27 on October 22nd. Current Expectations: The NDX should continue to move lower and test 1,136.61 on a closing basis.

CBOE Ten Year Treasury Index (TNX)

Current Opinion: Closed @ 2.873% Current Expectations: The TNX should move higher and test 3.027% and then 3.340% on a closing basis.