Browse > Home / General Investing/Trading Commentary / Market Direction: Uncertain Near Term - Fed Week, But SP Low Is Not A Firm Low

Market Direction: Uncertain Near Term - Fed Week, But SP Low Is Not A Firm Low

October 25, 2008 8:29 PM

perplexed.jpgNews should dictate direction here near term, but the sentiment is clearly to the downside. The Dow lows are key, IMO. There is no low in the SP I like. Therefore, I believe the SP has to go lower.  If we gap down on Monday, I doubt it will reverse as we should clear 8165. There could be buying near the close depending on how low we go. I do not think the Dow low will clear on the first trip down there, but anything is possible.

I am very skeptical of any move higher here. Sideways would be a win for the market at this point. One thing is very important. If we clear the lows, it does not necessarily mean the market will collapse, but it is possible. It will depend on when it clears and where the open was. For instance, if we opened up on Monday, and then cleared the Dow low as the day went on, the market would be in HUGE trouble, IMO.  Down 1000 or more would not be out of the question. In fact, I think it would be likely.

At any rate, I do believe we HAVE to make a new low on the SP. I do not thnk the SP low is very important. It will get people’s attention a bit, but the Dow low is still key.  Also, the market did close above the open on Friday. Therefore, Friday’s low is somewhat important. I think it is a false low however, and traders likely agree with the selling into the close as I said I thought very likely.

The Fed meets this week and we all know that those days can be very unpredictable and very volatile. One thing I do find likely is this. If they do cut a half or .75 and the market cannot find a floor, the market is likely in big trouble. If they cut they will not have much ammo left - and that is the danger here.

Written by Tom@StockBlade.com · Filed Under General Investing/Trading Commentary 

Comments

Got something to say?