On Monday, I suggested that if the Bulls 'want it', they better get on with it ... and well, we saw the outcome ... the major indexes have lost 2.84% since then. Complacency is the enemy in the markets.
We broke a number of major support and trendlines yesterday and held below them today. Again ... the bulls had a shot today to send a strong message to the bears and they failed to deliver.
I hate to say it, but I think we have more downside to go before we retest the highs. Today was critical to prove that the bulls are still in charge, and they failed on that front. Today, volume was light as the bears did not grab the ball and run either, but they aren't going to take long to move if the bulls don't go for it. I think the bears expected a large rebound rally and therefore chose not to short aggressively, but the more time we sit at these levels, the more brazen they will become. In fact, I would go as far to say that if we dont gap up on Monday morning with a strong showing ... we will probably have a down day and a very ugly week. I would assume that if this occurs, the 50 day moving average which sits a few percent below where we are now ... is the next downside target.
The only positive is that the VIX index which most insiders view as a measure of fear in the market and therefore can indicate future short term direction ... was down almost 8% today which implies that we don't have more downside and rather quite the opposite. All of my end of day indicators are showing bearishness ... so this one positive outcropping is not going to get me excited ... i am scratching my head over it, but not willing to place any long bets based on this.
The Nasdaq is looking the worst out of the indexes. Interesting that the market leader of this rally is the first to fall ... is it leading the way down just as it led us up?? The Russell 2000 is the strongest of the indexes currently ... which was the weakest in the beginning of the rally in early October ... hmmmm ...
An end of year rally which has become so normal for the markets is quite possibly not going to happen unless of course the bulls get in gear early this coming week. We might have to wait a few months for that decade high in the Nasdaq that I was hoping to see before the end of the year.
Monday should show us the direction for the coming weeks ... and with the market being so news driven, I would assume any news out of Europe over the weekend will dictate the future direction.
Have a great weekend, and let's hope for the best.
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