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The TO is declining, but is also at support. If support holds, the result will be a reversal to the upside tomorrow.
Summary Last week we said, "At the last minute, the indices were able to snatch victory from the jaws of defeat while most indicators either overcame resistance at the zero line, or found support at their rising bottoms line, which in the short-term tends to be supportive of higher prices. At the moment the path of least resistance is to the upside and we ought to expect higher prices. Having said that, we also want to state that we view the current move "terminal" due to the form its origination. Upside break-outs accompanied by divergences that we have witnessed over the past two months tend to be the "end of something" instead of being the "beginning of something." The markets sold off hard last week prompting calls for the end of Western civilization as we know it! Well, we do not think it will happen this week; we can still enjoy driving our gas guzzling Hummers while drinking our overpriced lattes. Why? Because the markets are deeply oversold and most indicators are--at most--a day away from the bottom of their range. The deeply oversold condition combined with Options Expiration this week ought to give the market the opportunity to bounce, and we expect it to do so by Wednesday. If it doesn't, that would mean we are facing a major change in trend, and in that case, the Western civilization may not end, but those who remain bullish, they'd better run for the hills! Also please read: "Actors and Manipulators."
Ike Iossif
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