Market Thoughts for October 7
The wheels are off !!! Can you say Black Monday ???
Friday the Unemployment report didn't seem that bad, but the numbers sure seemed funny. (as in pro-forma kind of funny)
The selling started from the opening bell and basically lasted all day, except for the decent bounce late afternoon before more selling.
I believe part of what caused the big dump was Shrub announcing a speech scheduled for Monday night regarding Iraq with some kind of MAJOR announcement.
Markets always hate uncertainty more than anything else and when Shrub used word MAJOR all the buyers left town (not that there were many left any way)
For this reason, I expect selling pressure to continue on Monday into the Shrub speech.
In fact, the best trend I have ever seen has been market selling immediately on any Shrub speech and that's no joke.
Friday's selling was pretty hard and the market closed with 85% downside volume.
I have said several times >>> market needs at least 1-2 days minimum of 90% downside volume to reach a tradable bottom.
Friday did not qualify, also the VIX and VXN were barely up which I found rather odd.
Anyway, I think this upcoming week is as good as any to see some real capitulation selling.
I cant imagine any bounce ahead of Shrub speech and who knows what that Bozo has up his sleeve on Monday night. (most likely the same nausea as before)
Shrub economic plan >>> War, Bomb, War, Bomb, War, Bomb (you get the picture)
Maybe I am early, but I truly feel that the NAZ will not see 1200 again for a very long time.
1200 is now huge resistance and I would be very surprised the to see this level breached to the upside.
pw1.netcom.com
the chart is a week old, but clearly shows the importance of 1200 level which is now history.
Also notice from the above chart, the next support level is around 1060 approximately
Quick warning:
Please remember that the rubber band is stretching in the very short term and will likely stretch some more before snapback. When the market does snapback, it will be vicious as usual. (like last Tuesday)
I think a likely scenario is heavy selling early in the week with possible snapback Thursday/Friday to some level close to 1200.
The snapback will be just another 1-2 day wonder and selling will resume immediately afterwards.
Just make sure you are prepared for the snapback.
Also, earnings season kicks off this week and a lot of bad news is already priced in.
Very similar to June Q and July earnings season, the market might take a stand in 4th week of October. (remember in July it was the 24th)
This is still my favorite chart of the NAZ:
saavycharts.info
Notice and pay close attention to the new short term downward trendline. Also watch the MACD lines, when/if they cross get out of dodge if you are short or get hedged for a while.
Notice I am not saying to buy Longs for the bounce to be net long, thats only for traders and bagholders with suicidal tendencies.
Market Targets for Mar 31, 2003:
(might have to revise lower by year-end)
NAZ 800 and DOW 6000
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Happy Trading
Michail |
