Securities Research Services

Friday, December 19, 2008

Decision Time

The SPY is now at a price where the market needs to decide one way or the other where things go next. The price has been squeezed into a corner here and we will either see soon see a breakout or a decline that could lead to a retest of November's lows.

Our thoughts here, and they're just our thoughts, is that we will see the minor uptrend break and prices will move back to November lows and perhaps slightly beyond.

Despite the interest rate cut this week, prices have moved quite a way off their November lows and all the bottom callers are back as the crowd turns semi bullish.

Moreover, V-shape recoveries don't often survive in bear markets to which we remain.

The market was showing some good bullish divergences of late but it has failed to follow through with volume buying and as such we feel that the market must fall on its own weight once again. We wouldn't put money down either way until there is confirmation, but be prepared with a list of stocks to short should it break here as it could break fast.

Below are a couple of potential scenarios that could unfold from here:

1 comment:

Chartist said...

Technical Market Forecast:The DJIA Will Hit between 10,027 - 11,169 by December 31, 2008!

My daily DJIA chart is as of Friday December 19, 2008. It provides a short-term Bullish forecast, and balances the majority gloomy Bearish view.

The chart with my notes and marks indicate a DJIA Ascending Triangle (short-term forecast to DJIA: 10,027.62 - Fibonacci retracement: .312); and a Reverse Head and Shoulders (Intermediate forecast to DJIA: 11,169.41 - Fibonacci retracement: .618). This work is confirmed by the other major market indices: NASDAQ, SP 500, and QQQQ.

The chart is available Free as an Image (.jpg) file upon request to Chartist

Happy Holidays!