. . . Pivotal Point for Markets . . .
It appears we are on the verge of breaking a key support level on the Dow. Take a look at a 3 month or even a 6 month right around the 8240 to 8260 areas. And with tax loss selling kicking into high gear both today and tomorrow after a tough year for many, I don't see a hold of this critical support level. A break here has little support until we near the bottom. . . though I am sure you TA'rs out there can give a more precise read. (It's my job to stay focused on the bigger picture).
Message 18274637
Message 18333615
I am staying with these earlier predictions, from Nov. 26 - calling for the market to "top out" on the "Friday Feast Day" after Thanksgiving. . . which was just about the top. . . then head lower until we hit a very important low in the days leading up to our heading to war. . . and the call for NO Santa Claus rally this year.
At the time I thought we would be headed to war early in January. Now, it looks as though we may not go until early in February. So that important low point may be postponed until we have passed the point-of-no-return with Iraq. So the exact date of the important market low is unknown at this time, but I would roughly place it between January 15, 2002 and February 28, 2003.
With the poor earnings of 2002 and the holiday retail season big disappointment behind us, the rally off the bottom just before war (likely in February) could be staggering. It doesn't necessarily mean we are out of the water on the economy. There may be more bad economic news on its horizon as it reacts to the woes of the markets. But I know of little better cure for an ailing economy than a strong equities market.
Now, the fly-in-the-ointment that could derail a strong rally. . . would be fresh news about Wall Street corruption.
The major investment banks got their slap on the hand. . . supposedly the BIGGEST penalty ever. . .nearly a billion dollars split between all the investment banks and paid back over 5 years. My guess is that after the first installment, they will get a judge to reduce the fine. . . good luck trying to find that article in the Wall Street Journal, you'll need a microscope. (Citibank didn't even have to admit guilt after congress learned that they masterminded the entire Enron scheme, then peddled the same creative financing plan to 15 other companies.)
Yes, if President Bush were to take decisive and heavy-handed action with regard to the SEC and the doubts the public has about its abilities. . .creating new confidence in the safety and security of these markets, then the rally that starts at the first shot of war could be astounding. So the steepness and length of the rally to come, is fully dependent upon the actions (or in-actions) of the White House, the investigative financial journalists and of course the media.
Meanwhile, we each must decide the level of risk we are ready to absorb.
Rande Is |
