Further Downside Ahead? Asks Market Timer Frank Kollar
October 2, 2009 (FinancialWire) (By Frank Kollar)
Two weeks ago we wrote that there were major hurdles ahead
for the stock market. Both the S&P 500 Index (SPX),
and its tracking ETF the S&P Deposit Receipts (NYSE:
SPY) were testing the 50% retracement level for the May
2008 through March 2009 declines.
And just above that is the 50% retracement level for the
entire bear market decline, so the odds of making new highs
in coming weeks were small indeed.
As expected, the SPX and SPYDRs hit a wall. Volatility
dramatically increased this week and on Thursday, October
1, the start of the last quarter of the year, the SPYDRs
reversed hard to the downside.
How far down do we go? There is no way to know, but there
are support levels that can be watched.
The first is the 61.8% retracement for the September rally
at SPY 102.82. That is only a fraction below Thursday’s
close and unlikely to hold.
The next is the September 2 correction low at SPY $99.58.
Watch for a reversal and potential bullish trade setup.
A decisive close below $99.58 would point to a test of
the 50% ($95.04) and 61.8% ($97.53) support levels for
the July through September rally.
The stock market has been overbought for some time. A
correction needs to erase some of the bullishness in order
for the advance to resume.
The http://www.fibtimer.com ETF
Strategy has a position in the S&P 500 SPYDRs.
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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for informational purposes and is not a solicitation, or an offer to buy or sell
any security. Opinions are based on historical research and data believed reliable,
but there is no guarantee that future results will be profitable. |
