Which way for the Dow?

The trading session for the Dow Jones Industrial Average today will be watched very closely! At the close last night, the DJIA has dropped by 265.88 points - a drop of 2.19%. It had also closed below the 200 day moving average - raising a question in my mind about which way will it go? See below...

You will see that, in the recent past, the DJIA has shown a tendency to bounce back within a few trading sessions of having closed below the 200 day m.a. (see Summer 2010 for examples of this). Also, I've noticed that the common 2-day reversal pattern (Hi-Lo, Lo-Hi) featured in March this year (see the L.H. circle on the graph above).

Today, I believe there will be a clear and decisive outcome. Either another 2-day reversal (mirroring March) or a decisive break even lower. Which will it be?

Well, logically, you might think that with the US politicians getting their act together at the 11th hour - it will indeed turn and start a new uptrend. The bears, on the other hand, will argue that there are a lot of pointers to a continuing downtrend - not least of which is the sheer size of the budget deficit.

For my part, I'm not going to predict or even guess - but I will be watching and ready to take action (within my US trading account).

What do you think? Will the DJIA finish up or down tonight?