Stumble it!The decline of nearly 700 points on the Dow Industrials is a micro move in the broad macro movements of the market. It never used to be that way (well, at least not since 1929) but when you look at the large moves we have experienced over the past few months a move of 700 points is almost becoming the ‘norm’.
On the S&P 500 we have two very important levels that have been established to which we have to wait for a sign of a ‘macro’ change.
— The first level is the upper trend line on the daily chart. Yesterday’s bounce off that trend line only strengthens its importance and tells me that it is increasing in importance.
—The second level is the lows of November 21st which is 739.
As long as we remain within these two levels then we are in a ‘micro’ movement period. There are numerous technical views of what is going to happen within this micro period. One view that can be taken from the charts is that a 50% retracement of last weeks gains (see Dow chart) will be a temporary floor and we go back up to the upper trend line again.
Another technical view (based on the S&P 500) is a continued decline back down to the lows of November 21st. Even Elliot Wave theorists are having a tough time calling the near term moves here. I have read two different reports, and each are conflicting. One has the market declining to the 6 handle range on the S&P 500 between now and January. And another theorist has the S&P 500 going back to 1000 between now and February before the next large macro down event.
With the conflicting technical indicators confronting us at this time we are at an hour by hour (if not minute by minute) analysis for the near term.
Other charts:
Alert: Trustworthy sources have reported that General Motors CEO Rick Wagoner was spotted on Interstate 95 headed to Washington D.C. on a bicycle to deliver his restructuring plan for his company.
