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The March S&P broke down through it's channel at 1158 yesterday indicating
high probability of lower lows. The overall market weakness is confirmed by
serious break of previous pivot lows in the NYSE and NASDAQ McClellan
Oscillator with readings approaching -200. The Ru2000 futures put in a
triple top and then proceeded to break below the previous pivot low
yesterday. The Amex broker/dealer index has not confirmed the highs in the
S&P. Attached S&P CC chart indicates possible projections and retracements
for this correction which will I suspect will probably be more serious than
expected. There is significant support at 1141-1142 and we are due for a
bounce. If 1141-1142 fails to hold, we are likely to reach 1106.
Further clouding the picture, the March bonds also failed to achieve the
minimum target of 131^20, suffered a nasty breakdown on 12/11, and failed to
rally significantly yesterday on favorable conditions. A break of 129^00
would confirm the breakdown. Copper reached it's standard (downward) thrust
objective a few days ago suggesting continued economic weakness. The failure
of bonds to capitalize on copper's weakness is troubling and may indicate
other troubles afoot.
Earl
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