SPX technical analysis – searching for the low

On the left hand, the SPX hourly chart we have a potential bankruptcy of car makers, one big insurance and Morgan Stanley looming. Again, a President who just talks the same phrases like a puppet and a G7 meeting with no clear signals.After Bush spoke, markets dropped sharply again – which is no surprise.

Ok, technically we have only one big chart point left. That’s the 770/800 SPX the 2002 support area. I thought that was our target for Q1 2009 and we will go there at some point. From today’s low, that’s another 5-8% and as things are going I cannot rule out getting there anytime soon (the problem is I hear that redemptions at hedge funds are huge so they are forced to liquidate into this weak market also good positions). That’s why when we get rallies for any reasons of a magnitude of 10% from here, it’s still worth selling if you are long with more than 50% of what you want to own in stocks. Especially financials are poised to go lower.

Coming back to the very moment, we are about to make a double hourly 13 combo below the daily Bollinger (way below weekly, monthly). I think that might mark the low for today but on a Friday it’s hard to tell with record volume, if it survives the final hour selling. The G7 will have to come up with some decisive action and part of it may be a rate cut. If again 50BP, that will not do much unless they can make sure that translates into lower 3 month Libor rate.
more later


~ by behindthematrix on October 10, 2008.

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