Vitas,
>>>> Since new lows reached a new high on this latest decline a few days ago, usually (not always) this means that the low was not a retest of the September low but that it is a low which will be at least retested or taken out later. <<<<
I also feel that eventually the NEW LOWs will exceed 500, or at minimum a retest.
It does appear that the market is on the way to retest the recent lows, and it is quite obvious that a break below those previous lows ain't good.
Keeping it simple, the DOW and SPX has already gone thru a series of 3-4 LOWER HIGHs and the NAZ is about to produce its 1st LOWER HIGH after its all-time high(keep in mind that the NAZ did produce a significant LOWER LOW). Simply put these 3 indicies are in a downtrend.
However due to seasonality issues I do believe that we are getting close to a mid-term bottom(within a month). Here are some of the timing issues Im considering:
1) END OF MONTH RALLY starting towards the end of next week, should be near a short-term bottom(1-5 days).
2) Since the market appears to highly effected by news, we still have the following ECONOMIC REPORTS: NAPM(11/1),
PPI(11/10), FOMC(11/16)
3) XMAS RALLY which starts as early at a NOVEMBER bottom.
As for timing, I think the negativity should continue into NOV, and near the FOMC meeting(whether before or after) we should be near a bottom, for the possible beginning of the XMAS RALLY. Im not saying that the XMAS RALLY will set new highs, just that it should be significant enough.
If the recent low in the SPX at 1233 does not hold, the next strong support is in the 1220-1205 range. I consider the 1233 as a critical support since it is also very close to the FIBINOCCI 38% retracement(1231) off of the runup since last OCT LOWs at 923. A break of 1231 barrier(38% FIB RETRACEMENT) would imply that the retracement could possibley continue to the 62% level(1112) or beyond. Of course there are plenty of support areas which need to be broken before getting that low, but I was just speaking in terms of FIB retracements.
seeya |
