Bulls Sucker Punched Says Market Timer Frank Kollar

March 23, 2008 (FinancialWire) (By Frank Kollar)

It is hard to feel bullish after two triple digit Dow losses in a row. The Dow Jones Industrials – DJIA took it on the chin for almost 400 points on Tuesday and Wednesday of this week. The S&P 500 Index – SPX held up much better losing 37 points, or 2.6%.

Is the rally over?

The March lows appeared to put in a solid bottom for stocks, with the SPX gaining 12% from those lows by early this week. Now some 2.6% lower, traders are wondering what is next for the stock market.

Sharp rallies create sharp corrections. The higher the rally goes before profit taking hits, the bigger the profit taking and scarier the selloff.

The SPX’s reversal occurred right at its 200-day moving average, as well as the 50% retracement level for its entire six-month correction preceding this rally. When selling occurs right at strong resistance levels it is not predictive of the end of the advance, but is just expected profit taking at forecasted resistance levels.

Unless the selling reaches and breaks below support at the SPX 1321-1341 levels, the current weakness is nothing more than expected consolidation in a longer term uptrend.

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.