Stock Market Trend Still Down Says Market Timer Frank Kollar
October 17, 2008 (FinancialWire) (By Frank Kollar)
After the Dow Industrials (DJIA) jumped 936 points on Monday, October 13, it certainly looked like the start of a new advance, but that one day rally was quickly erased only two days later when the Dow closed down 732 points.
There were concerns about that 936 point jump right from the get go. Monday’s rally should have seen up volume swamp down volume by better than 9 to 1. Actually, it should have 20 to 1 or better. Instead, it was only 4 to 1 and this was a huge red warning flag.
On Wednesday, the Nasdaq 100 index (NDX) made a lower close than the prior week’s worst closing low, another red flag from the country’s 100 largest technology companies.
Could a bottom be in? Yes it could, but we would not bet the ranch on it. The trend remains down until it is not, and right now, lower lows appear to be in the stock market’s future.
But for those agonizing over when the market will finally bottom, here is some bad news. Typically when a support level is decisively broken, the next level will eventually be reached.
On Thursday, October 9, the SPX closed decisively below the 78.6% retracement of the entire advance since the bear market lows back in 2002-2003.
The next support level for the SPX is the prior bear market low at about SPX 800. That is some 15% below current levels.
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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