Radical Change Cannot Be Ignored

This column was originally published on RealMoney on March 2 at 8:15 a.m. EST. It's being republished as a bonus for TheStreet.com readers. For more information about subscribing to RealMoney, please click here.

The big decline at the market's open yesterday took the Dow down to just about where some support would be expected. As you can see, the support of November seemed to come back into play yesterday. That also suggests the rally is likely to go further. In fact, there even may be room for nimble traders to make some money on the long side.

But more important is the larger picture. The upward move that began last July was a well-defined trend. That trend started to lose momentum in November, but the narrow channel continued. Now the uptrend has been decisively destroyed.

There has been a radical change that cannot be ignored, or passed off as just a correction, as seems to be the song being sung by both the government and the media. This was an important break, and one that was warned about repeatedly in this column. I am willing to try to play a rally here, because it is such an oversold short-term situation. But longer term, I do not believe the decline is over. ...