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{ 2008 01 23 }

The Short Term Bottom Is In

Well, the short-term bottom is in, thanks to a panic 75 point basis cut by the Fed. We saw an double bottom form at 11650 level during the past two days of trading and continued to move 600 points higher from there. The long term trend, however, is still down and this economy is still headed towards a recession. Use this rally to close any current long positions and cut any serious losses. For all you traders out there, look for resistance at the following levels:

DJIA: 12790
Nasdaq: 2460
S&P500: 1410

This is that dead cat bounce I talked about in my previous post. What we saw today was a combination of short-covering and some buying of financials and retailers. I wouldn't be surprised to see continued strength in the market to close out the week because this market is extremely oversold. Once we hit those index resistance levels, though, be prepared to take your short positions for the ride down.

Updates to come.
Posted by admin on Wednesday, January 23, 2008, at 2:39 pm, and filed under trading. Follow any responses to this post with its comments RSS feed. Comments are closed, but you can trackback from your blog.