Monday, February 23, 2009

Market Requirements Satisfied, but a Bottom in?? Feb. 23, 2009

The market has continued to decline as expected, and I've been pounding the table in the past few dozen posts over the past few months saying that new lows will be achieved in the indices. The Dow certainly has, the S&P is inches away, and the Nasdaqs have a little ways to go. However, this is the final move in a large almost two year bear market, so I do not want to get caught heavily short when this thing bottoms and reverses. If the market continues lower from current levels, I would be very cautious of a bottom and huge "rip your face off" rally that will immediately ensue and last for most of 2009. It's because of this I'm not short at all right now and have closed ALL of my short positions. If the market rallies from here, it's quite possible it's just gearing up for another charge lower so I will probably short the rally. I do have a gut feeling that this final segment of this long leg down will finish itself with a huge wash out selloff, i.e. Dow loses 500+ points in a day, or loses 200+ points a day for a week. Until that happens, and wave structure supports it, I will still be looking to short rallies.

If no rally occurs, then the next major opportunity will be to get heavily long. The rally from the bottom should be fierce and quick and should last several months.

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