Stormy Weather - GPS Broke, but compass still works.

As I mentioned, I'm flat for the weekend. Most of my plan off the predicted January Low fell in place. Now we're in some choppy choppy seas as the market tries to find a direction. The mediocre volume at the lows here with a sideways bias confirms choppy and hazardous trading conditions. If there were EVER a time to have a STOP, this is it... SHORT OR LONG. That sideways move is building up a drama.

As I scan the skies around me. I look at the factors that are currently influencing our stock trading environment... here is what I see. A lot depends on some external factors not directly related to the individual and indices charts. I guess you could call that fundamentals. Probably the 3 top influences here are, US $, Oil, and Gold.

US $ - I see VST bounce here to 73. That may be good for stocks at this point, because as everyone can see the old relationship between cheap dollar and high stocks is broken.... maybe for good.

Gold - Although most of the commodities are in a blowoff phase, I do see a very tiny sign of weakness that could indeed be brought about by some VST strength in the US$ - There are 2 support layers on gold that can be tested in the short term based on present conditions... one at 970, and one at 920. (round numbers).

Oil - Again, tiny short term weakness in volume in the contract at the highs suggest a pullback to 102.

Now keep in mind, all the moves that I have just described are very much COUNTERTREND consolidation move targets. Heck, we might come in up $5 up on the oil contract and $50 up on the gold contract on Monday, see new dramatic new lows in the indices. Even so, based on light volume at the top in these contracts, we should see a pullback at some point to those levels I listed, in the absence of a new stronger volume high in those contracts.

I'm playing a loose one here. If I see a big gap down and no volume Monday, I will be very tempted to take a long trade for short term with a tight stop.

People still believe the "Don't Fight the Fools, er I mean Fed" Mantra. Now whether or not cutting rates is a good thing for us I will leave for others to pontificate. I guess what I am suggesting here is that we could see light volume but deep pullback on Monday and then a buying frenzy into the Fed Report and options expiry.

As I showed you on the SPX charts on the monthly and weekly, the bulls are hanging on by a thread... I'm sure they are quite aware of it too. On the other hand, if you are bearish... you should have made some good profits over this last period from November. If these things break down here on volume, there are plenty of points left underneath. Because for example if the DJIA breaks here, there's probably nothing to stop it from going to 10000. The volume says to me we're due for a bounce, especially if they take them down to any of the following support levels on light volume on Monday:
SPX 1256, 1241, 1219.

So there you have it. If I were long, I'd have a stop in there somewhere. I see the upside as limited here... 1363, 1396. I don't think we're going to exceed those levels here and if we do then it's probably off to the races. We'll have to see a big bounce in the dollar and gold and oil basically resume 2007 levels.

reach a conclusion on that Gann turn yet?

Volume favors a low, but the sideways move is a red flag to make a "for sure" call. I like to see that light volume low intraday on Monday then blast out of there. If we gap up and hold it all day then the low is probably in... Full moon on 3/21(also options expiry... I guess market is closed 3/21 though)... if we keep moving lower from here, then we look for a turn there. It's still a bear market til proven otherwise, so whatever rally we get is expected to be another spike. So no, not sure yet.

Edited by SemiBizz, 15 March 2008 - 02:33 PM.

thanks...