Are We There Yet?

On the short term charts, there's still no sign of a bottom and Friday's "GDP" bounce was clearly rejected at the declining 5 dma. While I still believe the 1035-1040 level will come into play, I'm seeing more calls for that level to mark an intermediate bottom. This leads me to believe we'll either see a rally before that 10% decline mark is reached or we'll likely take that level out in an ugly manner before recovering. Fortunately, we don't need to know the exact level. We'll continue to watch for prices to pop back above the 5 dma and for the average line to turn up for a low risk long entry...

There's still plenty of room for downside for the Nasdaq. I see very little in the way of support here on the 30 minute chart. The next fib level (not shown) is at 2063...

The DOW is closing in on 10,000 and it may take a break of this level to create the selling panic needed to establish an intermediate term bottom...


If we do get a selling panic from the retail crowd, watch for the $CPC to spike above the 1.10 area that marked bottoms late last year. As you can see below, we're not quite there yet...

Speaking of not quite there, the dollar looks ready to challenge the $80 mark and I'm expecting that level to act as formidable resistance. While the dollar was able to spike above the 40 week moving average, that line is still falling steeply and I haven't bought into this being anything more than an overdue bounce assisted by a heavy dose of short covering...


I mentioned last week that the McClellan could fall further before reaching a level that has coincided with recent bottoms. We're getting closer and the chart below gives you a visual of what I was referring to. I highlighted the last two times this oscillator declined to these readings...


Remarkably, given the extent of this recent decline and all the headline risk regarding the banks, the financials have held up relatively well. As crazy as this sounds, once we do see a bottom, I'll likely look to get long a name or two (or ETF) in this sector considering the relative strength here...


Our short term chart of the /ES indicates we may see a bounce at the open, so be prepared for that possibility. Perhaps a strong break lower from this channel will set the process in motion for an end to this decline early in the week. That scenario actually fits in well with the rest of the discussion above...

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