(Chart of the NAZ from 8/06 - 11/23/07 ) shows it has given up about 66% of the move from August low to it's late October high . The bounce in the Indices today comes after a day where there was not one sector in the green, a rarity. NAZ bouncing right at the 200day moving average, only significant only if there is a follow through the next trading day, otherwise a one day wonder. A break above 2700 would mark the end of the correction. The path to least resistance is still definitely to the downside so this is no time to make big bets and keep everything on a tight leash. I am protecting my capital.
DJIA looks a lot worse than the NAZ, its given up about 80% of its move from August. It's sitting below it's 200 day moving average which is extremely bearish but its sitting right around it's up long-term trend line, a break below iti would be disastrous. Next support level would be around 12500.
S&P 500 is also below its 200 day moving average and is barely hanging on to its long term trend line. It's August low is the next support level which is 1370.
Next week will be crucial for the markets as we are right at a breaking point. I would have loved to have seen a crash straight down to August support levels to get the weak holders out of the market. In my opinion this rally simply prolongs the pain that is surely to follow, unless we get some emergency ease by the Fed on Monday.
Have a good weekend.
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