Monday, December 29, 2008
Large Swings at the Close, but Larger Picture is Bearish; Dec. 29, 2008
Above is an hourly cash S&P chart and it shows a strong support line (red horizontal line) in the 857 level. The market is telling us this level is important because it's bounced off it several times. Once the S&P makes a strong break of this level and closes the day beneath it, it should lead to an acceleration of the downtrend and target the 750 area. Despite today's strong bounce back at the close, we had a five wave decline, a choppy rise, and decliners outpaced advancers by almost 2-1 and down volume was 66% of volume was to the downside.
Regardless of whether or not the short term gives us a strong rally to the 950+ area, this entire rally from 740 looks very likely to be a correction. So I will be shorting any significant rallies.