Thursday, December 11, 2008
Market Needs to Rally Soon if it's going to 950+; Dec. 11, 2008
Today's strong selloff on severely weakened breadth warns of change to the rally scenario projected. For the first time in a few days the Nasdaqs showed weakness that led the Dow and S&P down. As you can see from the top chart, there's a mild 3 wave rally on the daily chart. This, combined with the stochastics in oversold territory looking like they're going to drop soon, warns that the next round of selling pressure may already be underway. Tomorrow should tell us a lot, and I have a feeling the auto bailout results or speculation may play a key role. Continued weakness in breadth and price tomorrow will signal that the next decline phase to new lows on the year is probably already underway. But I expect to see strength tomorrow and a strong rally in the S&P to the 950-1000 area before topping. I do feel this rally will be sharp and short lived, so it I will be shorting aggressively as it rises. If the market doesn't rally by Tues./Wed. next week, it probably means it won't rally at all.