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Charts courtesy of stockcharts.com

Friday, January 4, 2008

Down We Go

I ecpected a test of 735 on the Russell, and it did, slicing right through it. The market started to collapse in pre-market trading as soon as the jobs data was released, and didn't let up all day. The old trendline is back in play, the break of it (arrow) was a head fake which succeeded in scaring me out of buying TWM (inverse of the IWM).


Here is a 2 year chart of the Russell. Next support is at 710. We may get a test of that, but we are in oversold terrotory and may get a bounce before that.. If 710 goes, then the summer 2006 correction bottom is in play, and that is a pretty big drop.

The SPX is just a hair above the panic level of 1406 I am about 90% expecting a bounve off that. The Presidents working group (also known as the plunge protectiion team, or PPT) met today. Expect some shenanigans next week, although I doubt they have much ammunition left.

The Nasdaq bounced off the August 24 low at 2502, which may be decent support. If not, look for the August low to be tested.

Technology took the biggest hit today, but none showed much of any strength other than the defensive sectors (utilities, consumer staples).


I don't know what to make of what is happening in the dollar. I'm hearing rumors of an emergency rate cut next week, but this fall started long before those rumors came out. It appears to be finding support around 76.50.

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