|
Financial Sense Home l Market Monitor l Market WrapUp l Storm Watch l About Us l Contact Us |
||||||||||||||||||||||||||||||||||||
SUMMARY: Last week (1-20-06) we said, "The decline below the lows of the previous week, coupled with a close below support means that there is an 80% probability that the rally is indeed over. Given that some of the technical indicators are at their respective zero line, we may get a bounce early on in the week. However, the overall picture suggests that we ought to look for a further decline to the next support level later in the coming week--if not right at the start. We strongly suggest that you stay in cash until there is evidence that the decline is indeed over; there is none now." January 27th: We got the bounce and it carried throughout the entire week. Going forward the question is whether last week's action was the start of a new leg to the upside, or was it just a retracement of the previous week's decline. We suspect it was the latter, and here are reasons for thinking that way: 1. Our short-term probability models are indicating that the odds are nearly even between a decline with a magnitude of 4.5% (-/+1%) and an advance of the same magnitude. (see charts below.) 2. The trend indicators indicate that the intermediate trend is neutral. 3. Two of the short-term models are on a buy signal, but the suggested exposure to the long side is only 5%. At the start of intermediate term rallies we usually observe the following: a) the short-term probability models indicate that the odds favoring higher prices over the next 10-15 trading days are 2.5:1 -at minimum. b) the trend indicators turn positive. c) all of the short-term term models go on a buy signal and they indicate a minimum of 20% exposure to the long side. In other words, we are not seeing--at least not yet--the things that we ought to be seeing if the market was starting an intermediate term rally. Consequently, our conclusion based upon the current facts is this: there is a chance that the SP may rally to the 1295-1300 zone over the next 5-10 trading days, but if the underlying dynamics do not improve, the rally will fail at that level, and it will be followed by a decline back down to the 1240-1220 area. PLEASE ALSO READ: OPTIONS ADVISORY REPORT/2005 PERFORMANCE ANALYSIS COURTESY
OF MARKETVIEWS.TV
READ: OPTIONS REPORT
Ike Iossif
|
||||||||||||||||||||||||||||||||||||
|
Home l Broadcast l Market Monitor l Storm Watch l Sitemap l About Us l Contact Us |
||||||||||||||||||||||||||||||||||||
