US markets technical update

Again, the monthly chart of the DOW, as we can see so far, we tested just the support line so far. The VIX has risen to unprecedented levels even above what we expected – to 56 – that’s scary somehow since this is a quantum leap.
The capitulation we started today, as expected, came by inaction of the central banks and activated some patterns that gives us some possible price patterns in order to identify the lows for now. The current scenario is a real capitulation and has a bit more room left from here (without going into details) the patterns given indicate that the NDX can even drop to 1300, the SPX to 950 and the DOW to 9100.
This can develop now (within 2 weeks), but are extreme levels for now. The break away gap for instance in the NDX is just around an older low at 1440 and needs to be closed within 3 days with an island type price pattern this week (other wise it’s a big negative). The probability is very high for a rate cut and another measure by mid-week, which would produce such a pattern. Overall, the low-time frame is still around early November with the before-mentioned levels as bottom fishing levels for traders only. But we do not need to get there right away since the authorities need to strike back this week. A further bit of information which is interesting for the DOW in the 2000- 2003 decline the drop was 4553 points, right now we are at 4490.

While I write this I listen to the testimony of D. Fuld CEO from LEH – it’s freaking unbelievable what these guys did. Even for the 2007 end result, they cheated heavily by pumping up values of assets by a few hundred millions in a few cases – just to name a few. He still owns like $400 mil. – he should be put behind bars.


~ by behindthematrix on October 6, 2008.

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