Lower Lows Still Ahead for Stock Market? Asks Market Timer Frank Kollar

October 30, 2009 (FinancialWire) (By Frank Kollar)

The S&P 500 Index (SPX), and it’s tracking ETF the S&P Deposit Receipts (NYSE: SPY), had solid rallies on Thursday, October 29, completely erasing the previous day’s almost 2% losses.

A solid gain is always bullish, but there are reasons to be very careful here.

Typically the stock market corrects in waves of three. The correction lows on Wednesday would only be a single wave down. If this is the expected second wave higher, it will be followed by a third wave to new lows in coming days or weeks.

Another concern is the Nasdaq Composite Index (COMPQ) and Nasdaq 100 Index (NDX). These indexes rallied, but did not erase the previous day’s losses. In fact they both had “inside” days. Such days do not have highs or lows that exceed the previous day’s trading range. Such days are considered indecisive and not bullish.

Could Thursday’s rally be the start of a new leg up? Of course, but the markets are more likely to see another leg down before any lasting advance is begun.

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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