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A quick look at the monthly chart of the $INDU for the first full week or January is basically not looking good so far for the bulls. As one can see, we still have no crossover on momentum and no divergence either (something that works incredibly well with this model).

Now take a look at this Fibonacci price analysis of the $INDU monthly chart. It is entirely possible that if we do not take out the 9600 area on the $INDU that we are probably more likely to sink like a stone into the second quarter, assuming we take out the previous lows (7449.38) of late November. This could be the case if $VIX is forecast higher and the selling continues. If that is the case, then the first target low would be somewhere near 5900.

Am I trying to frighten anyone here. No, what I am trying to do is present a balance for what could happen in the future. At the extremes are where major entry points occur. Having a clear idea as to where to be ready to act is always a better course of action. It is better to be proactive than reactive in trading. Saves a lot of emotion (and money) when one approaches it that way.