If you were wondering whether the Mid-July rally in equities was a sign of a bottom or simply a bear market correction, it looks like the ladder after Monday’s more than 200-point drop in the Dow Jones Industrial Average.
The second huge drop in three trading days retraced the move from the two-year July 15 low (which dates back to July 21, 2006 but did not match the low from earlier in the same month) to the July 23 near-term high by more than 61.8% (see chart below). The retracement level was hit on an intraday hourly chart earlier in the session and the Dow was not able to rally above the important technical level by the close.
