The bear grinds on and on....
Looking at the above chart one can't help but feel a little depressed. We are now down 50% from the peaks amid 30 year highs in unemployment and a frozen banking system.
As a leading indicator, the push lower (and a break of the important fall low at 73.74) suggests we are not out of the woods yet. And the January Barometer (please visit website at http://www.the-rational-investor.com for your copy of this handy report) suggests there is further price deterioration ahead. Ugh!
Again, referring to the chart above, we are now comfortably within a steep downward pointing channel (deep red lines). This is bearish and will remain so until we start seeing higher highs and higher lows. As well, the moving averages are very comfortably bearish (13EMA < 30 SMA) also suggesting we will remain bearish for some time to come.
Should a rally come (very remote at this time!), my ultimate upside target for the present will be the gap (gaps don't like to be left open - especially on weekly charts) between $105 to $110. This would represent a move back to 10,000 on the Dow and a big psychological target going forward too.
What does this mean, traders ought to be short on a break of the recent lows (at or near 73.74) with stops just above the recent peaks (at or near 95.00). Investors have no business even looking at the US stock market for now. Current downside targets suggest the 59 area on SPY should be tested in the coming months.
That's all for this week,
Brian Beamish FCSI
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