Stock Market Bear Roars Says Market Timer Frank Kollar
June 27, 2008 (FinancialWire) (By Frank Kollar)
The S&P 500 Index – SPX declined some 3% on Thursday, June 26 as the financial markets sold off across the board, not only in the U.S. but also around the world.
The S&P 500, hovering at a critical support level all this week, not only broke decisively below that support, but also declined almost to the January and March panic lows in just one day. A break below support typically forecasts a test of the lows, but in this case, the SPX is now already at those lows.
We peg the panic lows at about SPX 1270. The markets traded lower in March but only intra-day. This is dangerous territory for the markets. A close below the March lows would likely create an escalating downtrend on rising volume. It will last until panicked traders unload all their losing positions and that will occur only when fear controls the markets.
On the subject of fear, the CBOE Volatility Index – VIX, is nowhere near signaling a bottom. Traders do not seem particularly worried as of yet.
There is no sense forecasting how low the markets could go if support breaks here. Certainly the June 2006 lows at SPX 1219 could easily be reached in coming days and if we are in a bear market, that level would likely also be surpassed.
Suffice to say, cash is king right now and any trader still holding bullish positions has had many chances to exit. Only the greedy pay with big losses.
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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