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What’s Going On With the Markets ??

Author: Harry V (info)
Website: http://myoptiontrades.com
Posted: March 30th, 2008 at 5:24 pm EST
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If you are a vetern in the markets, you probably understand. If you are new to trading and investing, the current market has been less then welcoming to say the least. Last week was relatively quiet when we compare to weeks earlier, 20 Point range in S&P and marginal climb of 1% in Nasdaq. Markets have come back to close where they were at the start of the week.

Quarter closing by Institutions, hedge funds and mutual funds was probably the reason. Even economic numbers this week came in pretty much as generally expected. Market, however, has to take a direction soon and we will know which way.

After the Bear Stearn fallout and all the negativity, it looks like a possible DOUBLE BOTTOM in most Indicies. If this holds, all we need to do is be patient and buy the dips!!

Wish real life was that easy. On closer look, starting March 5th, 2008 there is a clear WEDGE formation in SPY and $SPX charts. Anyone using that formation, will notice that Bears were trapped and weak Bulls shaken out with downswing of March 17th. After the rate cut of March 18th, the big push up action and following down swing since March 25th has trapped Bulls and shaken out weak Bears. So we are back to where markets were on March 12th. So much for easy buy the dip theory or sell the rally strategy.

Fed has taken every progressive action to avoid the big meltdown and market has already priced in another 0.5% rate cut. Initial resistances in all indicies viz 1420 in S&P, 12895 in DOW, 2540 in Nasdaq and 665 in $OEX are marked targets and look way too far at this time. Top down, there is likely chance that panic bottom brought on by Bear Stearn two weeks ago  will hold and attempt move back up slowly by end of the week, if not at the start.

We also have new earnings season starting and some surprises either way will help move the market from current limbo.

Enjoy the calm waters while they last, stay awake and happy trading.

Harry V 

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