Monday, September 29, 2008

Smack DOWN!!!

Need I say more? The S&P 500 got smacked (-106) and the DOW lost 777 points....from a technical perspective, it could get a lot worse. However, I don't know that this market is trading on technicals....more like...CRACK! But in all seriousness, just look at these charts.


Up above, we've got the DOW with a 20 year time horizon. Clearly, we're moving down, but from a technical perspective, if we don't bounce on that smaller green circle at the 10,000'ish level, then we'll be in a world of hurt. I say this because the next support level is not until about 7,600'ish! I would be that for the short term we'll get a bounce off of the 10,000 level. I would go on to bet that the large institutions will not put as much capital at work to allow the retail trader to bring the markets up and then they'll just short into it.


Above is the S&P 500. Again, we're looking at a 20 year - Monthly chart. Same thing, if we don't get a relief bounce from the upward support line at about 1000'ish we could easily see 800 on the S&P because that's where the next level of support is.

Again, I think we'll get a bounce at the levels where the first/smaller green circles are on my charts. Below, the VIX (volatility index - it's a measurement of fear) it's all the way up to 46!!! When you look at the VIX in the past where we had big drops in the market (just look at the charts above to do that). You'll see that's about where we bottomed out. For example look at the VIX, DOW, and S&P charts back in the 2002-2003 timeframe...the VIX was in the 50's and you'll see that's about the time we turned around.

Just my thoughts and personal opinion of what I'm seeing in the market.
(and never forget that CASH is a position too).

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