Good day for the bulls but all they did was put us right back where we were on Friday. As the trend table (below) shows things are still very mixed. Taking out either the late November highs or lows will help to clear things up.
Trend Table
No changes:
| Trend | Nasdaq | S&P 500 | Russell 2000 |
| Primary | Up | Lat | Down |
| Intermediate | Down | Down | Down |
| Short-term | Up | Up | Up |
(+) Indicates an upward reclassification today
(-) Indicates a downward reclassification today
Lat Indicates a Lateral trend
*** I'm simply using the indices' relations to their 200, 50 and 10-day moving averages to tell me the long, intermediate and short-term trends, respectively.
I'm in favour of the view that the SPX has consolidated enough. We just need a close above 1490 and confirmation that subprime teaser rates are going to remain constant for a few years.
After the HUGE up week last week, it looked earlier this week that the $SPX were headed back down below that steep descending trendline started back in early November. The move today really made it look like that trendline has definitely been broken and now the 200-day MA is being retested again. If the Fed gives us the half point cut that more and more people are clamoring for, I wouldn't be surprised to see the $SPX break out of the descending triangle you drew.
I think we are in the beginning of a run that should last until March 08'. At that point I fell the consumer's who have been effected by the subprime mess, will be out of credit, and the overall economy will feel it. However, with this insane plan to allow a "do over" for those that were fiscally irresponsible, I am not so sure. This move may just delay the inevitable, but make it much, much worse. I mean when someone is an idiot and racks up 50K in credit debt, and then you just clear the slate....they then become responsible and prudent in their spending right? They don't just go run another 50K up, expecting someone to bail them out again do they?
Formerly ADD Trader
ADD -- I couldn't agree with you more about "clearing the slate"... for both individuals and institutions.
Bryan -- Didn't we already get the rally for the assumed rate cut last week? I'm more concerned that we get a "sell the news" reaction, or even worse, that the Fed disappoints and gives the bulls less than they expect.
I wouldn't be surprised if we got a sell the news reaction, but we're still going higher after that happens. That will be the buying opportunity and for those that get the idea that its a new shorting opportunity will likely get burned...just some thoughts. :d/