SPX technical outlook – still building the low (part 1)

The monthly SPX has some unique features in this decline when we compare it to the 2002/3 decline. First of all we dropped below the 200 month average and stay below. This is the second consecutive month with a deep thrust below monthly Bollinger thereby making new lows. Finally we had overall a bigger decline in a shorter period. Those 3 observations prove we are not in a recession type of situation and the fact that after the SPX the DOW 50week MA crossed the 200 week MA which indicates more weakness mid term confirms the negative momentum.
Right now though we are steep below monthly Bollinger which holds the very likely potential of a snap back rally to the monthly Bollinger – witthin November (3.5 trading days) it could rise to 900 , when this is delayed (more likely to Dec the mandatory part will be less as the Bollinger moves down towards 850. So far it looks as my retest of the 2002 lows has been done and the trough could be in but I doubt that will be the case. we were in a little capitulation on Thursday but the manipulative Option expiration is a different story for Friday. Todays Citi bailout as expected gives markets a push and we might see some window dressing towards end of the week as Brokers yearend is due and they might want higher prices. at the same time Hedge Funds want higher prices as well but at the same time they still need to sell (although not this week neseccarily). So basically their are some incentives for higher prices this week but we do not have the real low yet and that will come in Dec – but best case towards end – or early Jan next year. More in second part later today…

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~ by behindthematrix on November 25, 2008.

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