S&P 500 Reversal? Not So Fast! Says Market Timer Frank Kollar
January 11, 2008 (FinancialWire) (By Frank Kollar)
The S&P 500 Index (SPX) has taken it on the chin so far in 2008. But is the bottom in? Did the Fed Chief’s comments today mark the beginning of a new advance?
The S&P 500 has broken below trend support levels that have held since 2003. That is not exactly a good sign for future market strength. Fear levels, as measured by the CBOE Volatility Index (VIX) have not reached levels that typically lead to a reversal and sustained rally.
Today’s words by Fed Chief Bernanke did inspire a rally, but if this is all the market can do on promises of future interest rate cuts, we wonder if the actual rate reductions will now be factored in, and not have the bullish value of past rate cuts.
The S&P 500 is now trading below both its 50-day moving average and its 200-day moving average. These averages have also crossed. Both of these are bearish indicators.
Taken together, there is a lot of bearish evidence and little bullish evidence, or at least the kind of bullish evidence that can support a new bull rally. If you are bullish, we advise keeping your finger on the sell button.
Kollar’s research has shown that the financial markets are in tradable trends approximately 80 percent of the time. FibTimer strategies define trends and trade them in both advancing and declining markets. Caring nothing about what newscasters say or what the latest economic indicator predicts, trends are where the profits are, and that is where FibTimer is.
Kollar is editor and chief analyst at FibTimer.com (http://www.fibtimer.com) which offers market timing strategies for S&P and Nasdaq index fund traders, as well as bond, gold, small cap, sector, ETF and stock trading strategies.
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