Market Should Start Rallying Tuesd./Wed.; Dec. 15, 2008

The market dragged all day to the downside and a sharp rally near the close helped bring the indices back from deep red territory. Again, the Nasdaq led the way and was down well over 2%. But no support levels I mentioned in the pior chart below were broken. As long as they remain intact, the market has significant bullish potential in the very short term. Tomorrow is the Fed rate announcement and that usually carries a lot of volatility. I expect that whatever the Fed does, it results in a strong rally phase that should last a few weeks and take the S&P to the 950 area. A strong break of Friday's lows, and especially a break of 820 in the S&P will signal the next decline phase is already underway and on its way to new lows on the year most likely. I don't expect that to happen though. Look for a strong rally tomorrow and/or Wed.