Friday, January 29, 2010

A Picture is Worth a 1000 Words

Some key thoughts on the S&P 500 below... keep in mind usually downturns will finish by a large swoon day, followed by an intrday reversal back upward.  Unfortunately with the "urgent buyer" pushing futures up almost every morning it is hard to have a very bad start to the day nowadays, so these conditions are difficult to fulfill.

If we can have a cleansing panic attack selloff we might finally get our oversold bounce.  Thus far this has simply been a grinding slow motion selloff.

Downside targets - S&P 1078 (yesterday's low)
If that breaks, the gap just below S&P 1070.
If that breaks, the 200 day moving average, roughly S&P 1045
If that breaks....

Certainly there will be countertrend rallies back up to shake off bears before we have to worry about those lower targets - for now yesterday's low is the key, along with 1085.  I don't know if we rally first, but with some very bearish technical situations setting up (i.e. the 20 day moving average about to cross below the 50 day) the rallies will be selling opportunities until proven otherwise.  Technically this is the worst the chart for the S&P 500 has looked since summer 2009 (July).

Wouldn't it be ironic (don't you think?) after 16 of 18 Mondays in a row where the markets finished in the green, if the 19th Monday was the knife that finally cut the legs out of the bulls glee?

[chart with comments below - click to enlarge]

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