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BOTTOM LINE FOR THE PERIOD INTO LATE OCTOBER
I believe that a low early next week falls short of breaking below the July
low. A retrace rally lasting about a week should be seen out of that low. A
50% to 62% erasure of the decline is certainly possible during this rally in
some indices. If the retrace rally runs into resistance trouble just before
the new moon in Libra on September 27th WATCH OUT BELOW. A decline that
threatens to break the July low will then run into an inflection point
between October 3rd and 5th. Inaction at the last moment to save the market
(for whatever reason) could then set into motion the largest percentage drop
in the S&P since 1987 from October 5th into late October.
As any surviving bear knows an inflection point such as we have in early
October is ALSO the point where the market protectors have succeeded in
saving the market over the past few years. Success in another endeavor to
preserve the bull will be marked only by seeing a drive higher beyond early
October to safety above any swing high made in late September. With the
election outcome hinging on this critical time period it would be wise for
bears to play it close to the vest.
I know it seems too simple to have another October crash. Maybe it IS TO
SIMPLE. Maybe it is also just the kind of well known time period of the year
that is capable of producing one if events begin to reinforce the notion
that it could happen in the mass mind of the public. I do know this. It wont
take a great deal of capital to hedge against it NOW. "Investors" who
ignored the obvious last spring paid dearly for it.
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