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wednesday update
Nov 13, 2008

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SHORT TERM: selling continues, DOW -411
Overnight the Asian markets were mostly lower. Europe opened higher, but sold off with the US to finish -2.20%. US index futures started higher overnight, but lost ground as the night progressed. At the open the market gapped down again, this time to SPX 887 and then traded down to 866 by 12:00. At 11:00 a speech was released by the FED's vice chair Kohn: http://www.federalreserve.gov/newsevents/speech/kohn20081112a.htm. Also today, Treasury secretary Paulson gave a speech at the Treasury dept., convincing the markets that the $700 bln Paulson bailout plan, that was originally to be allocated at the Secretary's discretion, which was then changed by Congress to be used solely for buying troubled assets. Is actually still being used at the Secretary's discretion. A perfect example of what has transpired for the last eight years! By 1:00 the market bounced to SPX 875, and then headed lower for the rest of the day. Nearing the close the SPX hit 850, and then closed at 852. We're right back to the SPX 848 pivot. At the close the SPX/DOW were -4.95%, and the NDX/NAZ were -5.05%. Bonds were up 23 ticks, Crude dropped $3.50 again, Gold slid $22.00, and the Euro was lower. Support for the SPX remains at 848 and then 789, with resistance at 912 and then 935. Short term momentum is getting extremely oversold. Tomorrow, the Trade deficit and the weekly Jobless claims at 8:30, then the Budget deficit at 2:00. Does this government even have a budget?
This downtrend has certainly had a few surprises. Each significant rally, which would have led to an uptrend earlier this year, has led instead to another wave of selling. The techs, NDX and NAZ made new closing bear market lows today. As did the SOX, the housing HGX, the financial XLF, and the consumer discretionary XLY. The downtrend low at 840 will probably be tested tomorrow. The short term wave count does not look inspiring at all. If SPX 840 does not hold we could be headed to SPX 789 in short order. This market needs some sort of catalyst to turn positive again. Expecting that catalyst could be the commodity sector. It certainly won't be anything coming out of Washington. Best to your trading!
MEDIUM TERM: downtrend low at SPX 840 being tested
LONG TERM: bear market rally fizzles

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