Rally Takes a Detour Says Market Timer Frank Kollar
July 25, 2008 (FinancialWire) (By Frank Kollar)
The bears came out of hiding as triple digit declines on Thursday knocked 283 points off the Dow Jones Industrials – DJIA and 29 points off the S&P 500 Index – SPX. It was only one week ago that we had a buy signal after months of declines and after bear market status was achieved.
During bear market rallies the advances are typically steep and the declines even steeper. Thursday’s decline was certainly that and traders ran for the hills, especially near the end of the trading day, when the decline picked up pace.
What happens next?
After some additional downside volatility, look for the advance to continue awhile longer. Bear rallies do not end until fear exits and the bulls feel confident. Thursday’s severe selling after only five days of advances from the lows shows that bulls quickly exited when faced with selling.
Our expectation is for the advance to reach the SPX 1320 to 1350 level before a top is made. Then we could see the next stage of the bear market decline and considerably lower lows. But for now, look for the market to regain its footing in coming days.
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.
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.
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