Market outlook for the coming week

The expected pullback today happens as we head for the weekend with a G-20 summit ahead. The overall pattern suggests that we will have a mixed week again but with stronger bias for next week as option expiration week with very high volatility will require to hold it stable to cash in the premiums on both sides. The message was sent anyway by Bernanke as he claimed that global central banks are ready to cut rates further and the bailout money printing machines running on maximum speed 24/7 . The relief for the markets depends on the liquidation spree of Funds, as the next round of redemption notices will hit the Funds this weekend – some have raised capital in advance and some gamble for higher prices to sell and have frozen liquidation. An old rule is that the market forces you to sell at the low generally as it seems to smell that people need to sell. So, we have a tug of war between those who want to buy but at lower prices (only shorts are real buyers right now) and some to play the double bottom theme of this October (I guess they were buyers yesterday). We are definitely in the process to build a bottom but it might take a few more weeks overall. Yesterday’s high volume turn-around is a good indication that next week’s bias will be up. We can fall to 850/60 SPX again til Monday and should trade up from that level too, probably even 940. The whole should develop as a brief ABC wave up – but some indicators
do not confirm a bigger low in place yet.

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~ by behindthematrix on November 14, 2008.

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