SPX technical outlook – market wrap up

We had a positive crash with good volume at the end. Aggressive short covering on a Tuesday after testing the lows on a Monday. A ‘little reversal I expected for this week – that was a bigger magnitude but within the range. So far, we only traded back to the triangles break. Since the ISEE put/call remained low, we can get some follow through to even 1000 SPX, which matches 38% of the last leg down. We can easily extend to 1000 without changing the tide. Some sectors show a low might be in place for now but other things miss still. Except for the NDX (which was the minimum requirement), we had not tested a new low. Basically, we are still in a sideways zigzag correction or consolidation pattern.

The New Moon effect worked so far and the last hour was very explosive short covering and we can see an inside day tomorrow until the FED comes out with their rate cut or we get higher and fall back after the cut. Even if we consider this an impulsive wave for a rally and would count it wave 1 (which I do not do ), it needs to come back most of the magnitude anyway. We will get a very good idea by tomorrow’s price action – so far just a bit more than expected brief rally.

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~ by behindthematrix on October 28, 2008.

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