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Friday, October 17, 2008

Respite From The Freefall

The SPX weekly, showing the first positive week in about a month. The magnitude of the decline is just staggering.

Despite a negative finish, today's action was actually positive. On the SPX we did upside and downside testing on low volume, They may not be buying with both fists yet, but they aren't heading for the exits, either. Since we are in a confirmed rally, it is time to look for buying opportunities, but with no leadership and very few stocks showing relative strength, it might be a good idea to get your feet wet in ETF's. I put in a probe in SSO, the ultra long SP500, will add to it if MACD confirms a change in trend.

The Nasdaq actually finished above it's open. This will probably have a MACD crossover at the same time as the SPX.

The Russell 2000 wasn lagging most of the day, and took the biggest decline of the indexes I watch. I have a resistance line drawn above today's close, but it is hard to tell exactly where that resistance is, soit's quite possible we are above it. As long as we can stay above last week's low, this should be alright.

The sector perfchart since July 15, the infamous "Cox short squeeze" in the financials, which was supposed to save them. Maybe it worked, because the are down "only" 20% since then. The question is, will energy and materials start getting a bid because they have been thrashed, or will the big money go for relative strength/ A lot of that is going to depend on what happens to the dollar. Will we continue in the current deflationary spiral, or will we reverse and head toward hyperinflation? Keep an eye on the dollar index.

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