Good News and Bad News for the S&P 500 Index (SPX) Market Timer Frank Kollar
September 19, 2008 (FinancialWire) (By Frank Kollar)
The good news is, the market rallied in a big way on Thursday, September 17. But the reversal late in the trading day was a news inspired event, based on information that the Fed may create an entity that would take over bank’s bad debt. Good news for sure, but no capitulation occurred before it. Market bottoms are made when there are no sellers left.
More good news was the CBOE Market Volatility Index (VIX) that reached above 40 on Thursday, a level typically associated with market bottoms.
The bad news is the market declines on Monday through Wednesday pushed the SPX below its long term declining trend support line. It also pushed prices below the 50% retracement of all the stock market gains achieved since 2002 when the last bear market ended. Typically when long term support levels are broken, the market reaches the next, lower, support level.
Add the good news and bad news together and we “may” have a market bottom in place. We need to see confirmation with higher highs in coming days, on good volume, before it is time to jump in. If we have a bottom, there is plenty of upside left. There is no reason to take risky trades this soon.
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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