Thursday, November 20, 2008

Get the Champagne out ... we are almost done

Well I was wrong with my anticipation of holding 845. I really would have thought the market would go through some more distribution before selling off and going into free fall mode. We all know that we are headed lower but breaking the triangle as we did yesterday put our indicators all out of whack again. At least the upper side trade worked out yet again. We had a continuation of our rally that topped out, had a moderate sell off worth 15 points (I said 10 so I was a bit too conservative), then retested the upper range just as forecasted one last time before finally deciding that there is nothing up there.

Now we had a major bearish close yesterday, no rally occured after we had broken the 845. I talked with some of you over MSN explaining what would occur after the 845 break as I did not put that into my post yesterday. I'll try to be more detailed next time =)

Special Event
Well, my heart is beating faster. We are only 40 points away from major support ranges, hitting those ranges will start the 2 months rally I was talking about back in october. I am not going to put any price numbers today, if we are to rally and have an up day in the morning (which I do not think will occur) we will just have 2 days of sideways trading on lower volume.

The most likly scenario is of course the continuation from the freefall, creating the v-bottom and hitting 764 in the smack middle. We should see MAJOR buy volume step in here and a recovery that we have not yet seen during our troubled times. I have been stressing this number over and over again and mentioned to many of you that this is a very very special event.

We are currently setup to have this occuring today, if not today it will be next week tuesday most likly. Of course everything can change, if one of the three auto makers comes out filing for chapter 11 I think even then the 764 will have a hard time finding support - though it should hold. There is always that 1% chance that we will continue a capitulation type sell off event similar or much worse then our october crash. Be mindful, be ready, be careful.

You ask me how the market can rally for 2 months after hitting this low? From a Psychological perspective stocks will be oversold/undervalued with bad news priced in. This is how investors will justify long positons and the market rallying. I honestly feel this could be a 200 maybe even a 250 point run from those levels.

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