Wednesday, January 2, 2008

Things are not looking good

We are now getting warning signs. The S&P has broken the lower trendline and the Dow has completed the trend reversal by closing below the Dec. lows. The weekly chart also doesn't look good as the 65 WMA has been breached again. All that being said I think we could see a bounce here as most of the short term levels are pretty oversold and there was some pretty heavy buying into weakness of the SPY ETF at the close. One more violent bounce to scare out the weak shorts before we start down in earnest might be in order. Especially since tomorrow is one of the most historically positive days of the year. If the Yen is weak tomorrow we could see that bounce.