Rally Confirmation Says Market Timer Frank Kollar
February 1, 2008 (FinancialWire) (By Frank Kollar)
Today’s stock market rally has resulted in a bullish confirmation for several of the major indexes. This is a remarkable change since Wednesday’s one-half point rate cut by the Fed, and subsequent sell off by the financial markets, when things were looking quite bleak.
But on Thursday morning, after a triple digit decline by the Dow in the first minutes, the market reversed, made a steady advance on higher volume, and erased the losses, closing with a solid gain.
The Nasdaq 100 Index – NDX had a bullish trend continuation day while the Nasdaq Composite Index – COMPQ and the S&P 500 Index – SPX both had solid reversals.
So far bear market status, widely considered to be a 20% loss from prior rally highs, has not been reached by the biggest indexes. Only the Nasdaq 100 Index (NDX) and Russell 2000 Index (RUT) have reached official bear territory with a 20% loss.
Does this mean the worst is over? For the short term at least, we should see continued gains. For the long term, the jury remains out. Do not lose sight of the reason for the declines. Fed Chief Bernanke has lost credibility; by moving too slowly to reduce interest rates while ample evidence of a looming recession were appearing.
The charts show supports were broken that reflect data back to year 2003 and to the bear market before. This means we may yet have another wave down before the bottom is reached.
There may be a rally here. It may even last awhile and ease the fears of market participants. But that last wave down, Wave 5 for Elliott Wave enthusiasts, could still be ahead!
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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