XOI Index – market outlook

The XOI Index weekly chart shows a weekly (setup) 9 count, which usually marks a turning point or at least consolidation area. The XOI lost over half of its value accordingly to the crude or gas decline and has found good support around 750 for 4 weeks. The 900 points drop should lead to a 38% counter-wave to 1100 before a retest of the lows or even new lows can be made. The wave count looks like an ABC correction with wave A having bottomed out and wave B on its way to unfold. The problem is only the price pattern does not look like a low at all and we might dip down once again to make a minor new low before wave B up can unfold since the last 4 weeks looks like a triangle pattern consolidation. So we might have to drop to 700 before we have the low in – a look on major components like Exxon and Chevron say that we need to test the lows still, as does the daily chart. We follow this closely as Obama as President will go after oil companies – at least the market might price it accordingly, hence after Tuesday they might drop with a DEM president.

Markets trading up as expected with the worst month in decades – fund managers need some window dressing with record fund withdrawals of $44 bil. and no one wants to miss out on the big rally?? Volume is quite low though and, as said, next week markets will rather drop again. The NDX should reach the 1350 today and retreat from there – we have to follow closely.

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~ by behindthematrix on October 31, 2008.

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