However, the fundamentals point to more downside because there will be more corporate earning reports in the pipeline until March.
This Wave 5 down is quite impulsive because the sellers know what to expect....so rather than selling their holdings by bits...They chose to exit at the best price possible before any further damage to their holdings. This sort of impulsive sell off will create more overhead resistance for any potential rally to overcome....so take note of SPY - 85 level as potential resistance.
According to the chart of SPY, this sell off will take a break or resume on next Monday 26/01/2009. There is really not much support below 80, so we could be heading down to retest 75. Some other blogs are saying that there could be a possible rebound to around 88-90. I would rather keep an open mind on all possibilities.
The financials are looking really weak...Last week FAS was selling for 15, yesterday for 7. I wish to caution you not to enter into a trade before any confirmation of a turnaround even though it looks cheap. Imagine if most financial institutions are nationalized like FNM, FAS could sell for 7 for a very long time.
I am sticking to my trading strategy of not holding any positions overnight.
My watchlist:
GS, IWM, BNI, POT, GLD, RGLD
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