FEB 24 INDEX UPDATE
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Last WED I got CLASS 1 BUY signals across the board with the buy-in window on THUR. With the strong negativity in the market and the darn 3-BLACK CROWs all over the place, there was the fear of a negated CLASS 1 BUY signal on FRIDAY, which would be a strong negative. Although the THURs LOWs did not hold intraday, the overall market closed significantly above the THURs LOWs, but need further confirmation.
The major indicies and many stocks did get HAMMERs which is reversal candlestic, but is a 1-DAY pattern and requires confirmation. The HAMMERs on the SPX and OEX were perfect and the RUT had a perfect DRAGONFLY DOJI. The patterns on the DOW/NAZ/NDX resemble HAMMERs but the lower shadows are not long enough, so lets call them imperfect HAMMERs. Many HiTECH stocks also had patterns with longer/long lower shadows, like QCOM, RMBS, AMAT, TXCC, CSCO. I also notice a BULLISH ENGULPING on JDSU. Per the candlestics there is a clear hint of a possible reversal starting, but again since it is only a 1-DAY PATTERN, except for JDSU, its best to have more confirmation.
It strongly appears that the WAYNE ANGEL(former FED GOV.) comment - 60% probability of FEDs lowering rates next week, had a strong impact
in reversing the market yesterday. It was mentioned by NANCY and others on the STOCK ATTACK thread, and by LEE on our website that there is a strong probability of a rate cut based on the bond futures, but the question now is when - before or at the FOMC meeting in MARCH. I got blasted by LEE for not reading our own board since such was posted previously - sorry LEE, but you know I dont read alot since it confuses me too much. ggggggggg
WAYNE ANGEL did say rate cut, specificly next week, so it is fair to say that if a rate cut doesnt arrive next week, another period of selling has a good chance of starting. I mention this, since a "no rate cut" could set up a retest of the recent lows. As mentioned previously on a statistical basis, declines of 7%+ has a high probability of retesting the lows. No I didnt say 100%, just high probability. I realise that the chances of a RATE CUT is very high, but I would not totally ignore the possibility that it doesnt happen next week, in light of the WAYNE ANGEL comment which has set the stage up for negativity to resume if the rate cut doesnt occur specificly next week.
OK, if the rally did start yesterday, then where is the upside. When studying bear markets, it was common that rallys were still able to reach the FEB 38% level and it was also mentioned in the past that the 38% rebound was a common rule in ELLIOT WAVE. Assuming that yesterday was the bottom, with a possible retest, then the 38% FIB LEVEL on the NDX from the SEPT PEAK would be 2775(4147 to 1935).
In the past many, including myself, felt that the early JAN trough at 2087(NDX) was the end of PHASE 2 of the 3-PHASES of a BEAR MARKET. However the rally that followed to 2771 was 32.7% which is short of the FIB 38% level. Not to say that a rally after a selling phase in a bear market has to be 38%; however the NDX did set a lower low on FRIDAY, about 6 weeks later than the
2087 trough. Im more inclined to say that JAN trough at 2087 was not the end of PHASE 2; therefore yesterdays lows should be the end of PHASE 2, of course if it holds. This implies that if there is a PHASE 3, it should even be lower - on the NDX I have the next support level at the 1400-1500 region.
One main negative yesterday was that the SPX did sell-off more than 20% from the all-time high of 1553. Based on intraday highs and lows, the SPX sold-off 21.76%. The common belief is that a bear market is where the selloff is greater than 20%, so according to this belief the SPX entered bear market territory yesterday. |
