The overall market as measured by the Dow Jones Industrial Average lost 435.99 points or approximately 6.2% last week to close its lowest level in over a decade The broad based market looks the worst I have ever seen it in my nearly 20 year career. I am expecting the overall market to continue to decline until someone in Washington who actually has some influence finally realizes that business profits really do matter. As far as the Dow Jones Industrial Average is concerned, I see downside support on the Dow at 6,547.79, if the Dow Jones Industrial Average closes below that level, then the next level of support would be at approximately 6,391.69 I first published a chart of the Dow Jones Industrial Average with these downward trendlines in the December 8th, 2008 edition of the Sterling Weekly. Since then I've been updating as the Dow continued to trade within the extrapolated trendlines. With the recent move downward, I am finally able to make an estimate on where the lower of the two (2) trendlines comes into play. My estimates are the lower trendline is providing downward support at approximately 6,322 and is declining at a rate of approximately 20 Dow points a day. I should also include a note of caution that since the start of the year, the lower of the two (2) trendlines has been broken on three (3) occasions, however following each time, the market has briefly rallied. My thoughts are that we are within a couple hundred (probably about 300) points from the downward support from which the market may attempt to rally. Look for it to possibly occur late this week following the House hearings on Mark to Market accounting, or depending on how the hearing goes there could be a big move to the downside.

Please note that will Monday March 9th close of 6,547.05 the Dow Jones Industrial Average closed within a point of our stated support level of 6,547.79. There is a reasonable chance that the Dow may rally from these levels. The trading activity today (Tuesday March 10th) will be key. If we are higher today, then there is a reasonable chance the Dow will rally to the upside resistance point of 7,552.29. If we are lower today, then I expect the Dow Jones Industrial Average to continue to move lower and test 6,391.69 on a closing basis.

The Amex Computer Technology Index 'XCI' is an index of stocks in the computer industry. It is one of the oldest indices that essentially tracks the high tech industry, and over time it has proven to be a highly reliable index. I have included a recent chart of the 'XCI' below for your review. I have included the chart on the 'XCI' because I feel that yesterday's close of 466.66 is significant because it breaks the support established on November 20th of last year when the 'XCI' closed at 470.78. The breaking of this support signals a move to lower levels. In reviewing the past charts of the 'XCI' I see support on this index coming in at 405.34 from its October 2002 lows, and if that fails to hold the next level of support comes in at 331.39 from the lows established in April of 1997. This is important as it signals an additional decline in the 'XCI' of 14% to 30% in the 'XCI'. This is significant for 2 reasons. The 1st is that the other high tech indices such as the MS. High Tech Index 'MSH', the CBOE Technology Index 'TXX', the Amex Disk Drive Index 'DXX', and the Amex Networking Index 'NWX' (and the stocks that make up these indices) are likely to follow the 'XCI' and move lower as well. The 2nd reason the close of the 'XCI' at these levels and the likely move lower is significant is because it is signaling a significant slow down in business and consumer spending. In other words, the economy is going to get a lot worse before it gets better.

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Dow Jones Industrial Average (INDU)

Current Opinion: Closed @ 6,547.05 Last Signal: Called Lower (again) with the close of 8,378.95 on October 24th. Current Expectations: The Dow Jones Industrial Average closed within a point of our stated support level of 6,547.79. There is a reasonable chance that the Dow may rally from these levels. The trading activity today (Tuesday March 10th) will be key. If we are higher today, then there is a reasonable chance the Dow will rally to the upside resistance point of 7,552.29. If we are lower today, then I expect the Dow Jones Industrial Average to continue to move lower and test 6,391.69 on a closing basis.

The S&P 500

Current Opinion: Closed @ 676.53 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 649.44 on a closing basis.

The NASDAQ 100 (NDX)

Current Opinion: Closed @ 1,043.87 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 1,036.51 on a closing basis.

CBOE Ten Year Treasury Index (TNX)

Current Opinion: Closed @ 2.886% Current Expectations: The TNX should move higher and test 3.340% on a closing basis. Please note that the longer term trading range of this index indicates that the current yield on the 10 year bond is abnormally low and it would be prudent to expect that the yield on the 10 year bonds should return to more normalized levels of 4.5% plus.