Stocks and most commodities continue lower

Paulson doesn’t appear to know what he is doing. The markets started the day lower and then accelerated to the downside after Paulson spoke. He seems to want to change course with the bailout package, which is fine, but he didn’t seem to inspire much confidence. In the last post I was giving a heads up on a potential inverted head-and-shoulder formation. I was encouraged by what appeared to be declining volume as the pattern was unfolding, as well as waning momentum on the moving averages. However, the trend and momentum are both still down, as was also pointed out. The potential pattern was just a possilibity that seems a bit more remote after the two down days since that post. If there is any reason to hold onto a shred of optimism it would be the still declining volume pattern with the possibility – not a forecast – just a possibility of a triple bottom. Intel is pushing lower in the after-hours market and could easily push the indexes lower on Thursday. Should the market either hold the previous lows, or break to new lows with a price rejection, that might do it for the downside. The bearish sentiment is just about as thick as I’ve ever seen it. The backdrop for the market is obviously still very negative, but markets usually turn when the news is the most dire. I think every trader on the planet expects and assumes that the previous lows will be broken at any moment and the next downleg will begin and that the Dow will erase most the the gains from the entire bull market starting in 1982. I’m hearing these projections more every day. It will be interesting to see how the markets react if prices challenge the October 10th and 27th lows. The market profile is the best tool I know of to determine if prices reject those prices are start to accept them.