Don Hays says it is a bear market. And he is talking about the NAZ dropping below 2000 before it is over.
For the Dow Jones Industrial Average, the critical breakdown level is 10,300, and it appears to me that it will immediately go
to 9200 after that breakdown. But the major support level would be 7000. For the Dow Jones Transportation index, the
critical breakdown level is 2220, and I really don't have a target for this volatile index. The all-important NASDAQ
Composite has already broken its key closing low that was made back in that July 2000 decline, and I believe it can quickly
move down as low as 1800-1900 in the next 12 months. In my heart, I think the risk could be back to the 1350 level that was
reached in October of 1998 if the panic gets intense. The S&P 500 will break under an important head and shoulders type
neckline support at 1280, and could easily fall to 800 in the next year.
But we'll play this one-day at a time. This kind of gloom does not mean that some stocks will not bottom out well ahead of
the indices, and that will give us an opportunity to put some of our dry powder back to work. I am not a short-term trader,
but in some periods it is very important to almost assume that role, willing to plant some seeds, but also putting stop losses
under those seeds to neutralize the risk. That is exactly where we are now.
That's it for today. The McClellan oscillator remains very oversold, and most of the time that means a "bounce." But sad to
say, on extreme periods as the traders are stepping in to play the bounce, then the chute drops the markets to those once in
every four years type of despair. I can't say for sure which will prevail this time, but be careful. This is not a time to be a
hero. |
