Dow Short ETF (DXD) Again Trading Beneath Prior Rally Peak

As many of you know, I examine the technical work of the inverted ultrashort equity ETFs to see if they provide clues about the direction of the major equity averages... Let's take a look at the pattern and technical underpinnings that have developed in the UltraShort Dow Diamond ETF (AMEX: DXD).

What should we do with this chart of the inverted DJIA? Let's notice that the DXD has stair-stepped lower in a series of lower-lows and lower-highs since the day of the emergency Fed rate cut (75 bps) on 1/22, which means that a relatively strong downtrend has developed during the past two weeks that has pressed the price structure back beneath its prior key support/upside breakout plateau at 55.15 (11/26/07). Today represents the third session that the DXD is trading beneath its prior rally peak (55.15) and breakout level, which is a sign (so far) of weakness in the DXD (strength in the major equity market ETFs). The price structure is pressing towards a confrontation with its rising 50 DMA, now at 52.76 during a period where the near-term cycle work (50 day low to low) suggests strongly that lower prices should continue into the latter portion of February. In other words, despite today's action, I don't have compelling reasons to expect the "bear" to reassert itself for a while longer.