A few numbers:
- DOW is more than 4,500 points down from its October 2007 high and only 2,100 points above March 2003 low;
- S&P 500 is more than 500 points down from its October 2007 high and less than 300 points above March 2003 low;
- Nasdaq 100 is mote than 800 points down from its October 2007 high and about 500 points above February-March 2003 low;
Pretty scary... Yet, I'm optimistic. It's going to be up and taking look at volume surges I saw during this crash I would expect to see a recovery to the August 2008 levels at least. The question is when it will go up. The answer is "sooner or later, but not during this week to that levels for sure" (smile). But seriously, I do not expect the indexes to recover to that levels even by the end of this month, on the other hand anything could happened and that is why it is good monitor the market on daily basis. I believe many traders my find this time good for long-term pension investments by using 401k to buy some stocks on monthly basis (using dollar cost averaging).
For short term speculative investments I may suggest only one - protect your profit. As soon as your position is in profit it is good to have trailing stop set. If you are today in winning position, in such volatile market without this profit protection you can be in losing position tomorrow very fast...
So, what my technical analysis tells me.
This week I decided to use the same chart explanation table I used in my "
Nasdaq 100" post on September 6, 2008
| |
Nasdaq 100 |
S&P 500 |
DJI |
| SBV |
Bullish - Moving up |
| MVO |
A lot of red MVO and absence of green MVO suggest highly oversold market |
| Bearish - MVO still negative. only when it becomes zero we may say that the volume went down and panic selling is behind |
Bullish - MVO=0 and the last MVO was negative |
| AD Osc. |
Bearish - Moving Down |
| MACD |
Bullish - Moving up |
| RSI |
Bullish - Just moved above 30 |
| Stochastics |
Bullish - Just crossed 20 |
| McClellan |
Bearish - Negative, moving sideway or down |
| VIX |
VIX (Volatility index) is above 50 indicates extremely oversold levels. Yet, it does not move down and could indicate bearish sentiment |
Keep in mind that technical analysis based on the 60-day chart cannot be used for mid- or long-term trend. The usual trend that could be expected from the 60-day chart analysis would not last longer than 5-10 days in the normal market. In the high volatile market we have I would not bet beyond 1-2 days from now. Again in such volatile period it is very important to monitor charts constantly - the sentiment changes are very fast and rapid.
