XBD technical outlook – market update


The XBD (Broker INDEX) makes a 13 by approaching the old low at 76 today, which implies some sort of low is due now or the next days for the brokers. Although we have still 5 points (6%) to drop to retest the low 2 weeks ago. The point is that some members of that group, like GS and MS, have way to go since they are in week 9 respectively 10. I stick to my targets of 80 for GS and below 10 for MS but that can materialize at a later point anyway. In any case, that is a little alert for me, since we can expect some interest rate action soon by central banks and, as I stated earlier, next week might be tricky since we are far below weekly Bollingers and a snap back rally of some sort will show up very likely with a rate cut. Unless we see the capitulation now, which might bring a strong rally, but is not around right now. The SPX is getting close to a double bottom though, which also can bring short covering – still we need to test the 2002 lows for the real low. So its getting a bit tricky and a small rally is due next week at some point anyway and we get capitulation thereafter. Let’s see. I’ll keep you posted.

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~ by behindthematrix on October 24, 2008.

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