Tuesday, September 09, 2008

Bottom or not to Bottom?

Babak over at Trader's Narrative made a good case for a bottom (at least in the Dow), although current closing resistance could put in a spanner in the works over the short term:


But Richard Lehman remains cautious

There are some mighty strong influences on the trends these days, making them challenging to decipher, to say the least. Today's action rocketed upward, then back and then upward again, but not breaking any of the overall downtrends I can see. There is a bit of room before the downtrend lines get hit, but that resistance should be felt soon. The Fannie-Freddie takeover was a relief, and caused lots of short covering, but not what you would exactly call good news overall for where things are. That's why I believe this spike will end up being contained within longer term downtrends. The VIX was actually positive for much of the day, despite a healthy rise (indicating the smart money felt it would reverse back down soon), but I see the Sept VIX futures closing at a discount (saying it may move higher in the next week or so), so even there the water is muddy. These are tough times to read the trends and lots of heavy crosscurrents going on.

But the challenge is for the tech averages - the Nasdaq 100 in particular looks rough


And the semiconductors made it too but not beyond former support - current resistance:


It's going to take more than one 'good-day' of news to fix it (and the Fed bailout was hardly greeted with joy by the tech indices).



Dr. Declan Fallon, Senior Market Technician, Zignals.com the free stock alerts, market alerts and stock charts website
 
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