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Bear Rally… or pure BULL

Author: Harry V (info)
Website: http://myoptiontrades.com
Posted: May 25th, 2008 at 10:48 pm EST
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5 days of down moves and markets have swung back enough to revive the BEAR. Before this swing down it looked as if good old BULL was back and there would be no more pain. How fast things change !!! Oil has attained highs and seems ready to roll over. FOMC minutes have roiled the forex markets and there is clear BEAR flag formation and $DXY looks ready to get slaughtered all over again. If Dollar rolls over, what happens to commodties and inflation?? There seems like confusion and Panic all across and all the more reason to stay calm and focused.

Based on new March 17th lows, we have revisited our upside targets for $SPX, Nasdaq and $OEX. Dow index did not make a new low on March 17th and as such remains unchanged.

DOW:: R1=12894, R2=13233 and R3=13657

$SPX:: R1=1407, R2=1445 and R3=1507

NASDAQ:: R1=2420, R2=2487 and R3=2563

$OEX:: R1=653, R2=670 and R3=690

As we notice, DOW and $OEX have double top formation and strong down moves last 4 days. $SPX and Nasdaq have Head Shoulder formations and markets likely closed at neck lines for both. After the holiday weekend and due to current over sold market conditions, we will likely see right shoulder formations to complete H&S.

All the turmoil and swift action of past 4 or 5 days says it is time to watch and may be prepare for another leg down. $VIX has also moved up from low of 15.82 just 5 days ago to high of 19.80.

If the BEAR rally is really over, and January / March lows are broken, it will be time to look for supports there under and we will take the worst case scenerios based on up moves since lows of 2002 / 2003. Our worst case targets should the GRIZZLY BEAR unfold::

DOW::S1=10782, S2=9990 and S3=9115 to 8695

$SPX::S1=1161, S2=1068 and S3=965 to 941

NASDAQ::S1=2003, S2=1805 and S3=1585 to 1483

$OEX::S1=554, S2=512 and S3=465 to 459

At this time, these Supports are way too far and do not look likely targets and we hope not. But the idea is to be prepared.

Hope for the BEST and prepare for the WORST. Stay tuned and watch the price actions.

Harry V

  

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