Yesterday (11/19/08) we had a big down day. In the final hour, Dow, S&P and Naz all had a sizable drop. Dow close below 8000 mark again, and both S&P and Naz created new year to day lows. QQQQ down 1.48 also created fresh lows. Clearly market resumes the down trend. After market I have carefully review the EWT analysis and knew something need to re-evaluated based on market condition. I will give a complete report about EWT for near and middle term analysis over the weekend.
The major changes for wave analysis is the wave 3(4) that actually already finished and wave 3(5) has started for sometime. I had to admit that I has some impact out side of my analysis recently and lost my objective analysis. It will be corrected in next report. I should insist my analysis purely based on data and facts. Market does not care your opinion or anybody’s opinion. We should follow market message, and adjust our trading tactics accordingly. I have corrected some wave count what I missed in above chart. ( see chart) according to Fibo index and Golden ratio, SPY near tern target is around 74-75 area. Yesterday’s new low open up the door to re-test 10/2002 lows which locate at 768-788 for SPX, and around 77-78 for SPY.
We are facing very dangerous market and there is no sign for recovery. XLF just created new lows. C, GS, and many other financial companies have created new lows.
Semi index SOXX closed at 177 which is 12 years low since 1996. Oil, Gold, materials base metals are all in relentless down trend.
People gave up their positions one after another. We have not seen the supply reduced. So the near term market is likely to continue down trend toward the possible target area.
Current oversold condition becomes worse and worse, but it is not necessary to develop a strong rebound. We just need to keep in mind of that. Clearly seller is now in control of the market. We could see some bounce after recently sell off, but all recent rallies failed with no exception. We still see the power of Bear force.
Whether the 10/2002 low can stop the down wave? We don’t know. As the down trend strength and speed accelerated, volume picked up, it could break through the 10/2002 lows. At this time, stay at sideline will be the best strategy.
Take Care.
