Sunday, November 8, 2009
Market at Crossroads
I spent some of the weekend pouring over the bullish and bearish evidence and the result is several bullish AND bearish arguements that essentially cancel each other out. Instead of listing all of them, which I feel will only net a neutral outlook anyway, I thought I'd just simply state that early this week will tell us the medium term direction in the market. The market has been consolidating late in the week which usually means a "break out" is coming. If the market tanks early this week, then the bearish outlook will be on very firm ground in the medium term and all is well for our bearish case. But if the market rallies steadily on strong internals, then the 1101 in the S&P will be extremely vulnerable. A sharp rally and reversal early Monday morning does not count, and that would actually be bearish.
Watching the US dollar this afternoon into the Asian session may be telling of what will happen tomorrow in the stock market. The stock market should move opposite the dollar so following it into the US stock market session may give us a clue which way this market is about to "break out" in the coming days/weeks.
No matter what the short term holds, a continued rally to new highs above 1101 DOES NOT eliminate the larger wave count and outlook posted at the right side of this blog. The message is claer, with 5 waves down from the 2007 highs, the larger trend is down and I strongly feel the March 2009 lows will be broken. A new high above 1101 in the S&P will only mean another delay in its charge toward that goal.