South is “The” direction

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US stock market futures are pointing to a lower opening, it could easily be triple digit lower opening. FYR, Asia is down (Bombay down -4.28%, Shanghai down nearly -2%, Hongkong is down > -3%, Nikkei down nearly -2%, Singapore >- 3%) and Europe is down (London >3 %) as well.

For the past few days, markets are closing at lower than opening, a typical phenomenon that we notice in the bearish days. Is it a full fledged bear market, debates are on, but except for S&P500 and Russell 2000, we are still “+” for the year for Dow and Nasdaq.

sell-in-may-and-go-away.pngOh yeah, do you remember “Sell in May and go away” theory? Most might have forgotton (I hardly heard this on CNBC this year) the histroy as we were making new high everyday, but guess what? all the indexes are much lower than those were on May 7 (1st Monday is generally regarded as the opening day for “sell in may and go away”). This doesn’t mean it concludes one should always sell in may and go away, but hey why not keep history as also one of the indicators?

dow-correction-aug-2007.png12,800 (+/-100 points) is a key support area for Dow, if broken, be ready to embrace 12,550 or 12,000. By the way, I like big pictures, on a 10 year chart, 12,500-12,600 is also a solid 78.6 fib support point from monthly charts perspective. dow-10-year-monthly.png

As of now, Dow has already corrected by 1160 points from 14021 high or slightly over 8%, allow a few % more and it’s a good healthy correction before it resumes the trend (exception are always there). Albeit, if it continues to drop, look forward to 11,500-700.

I don’t get into complicated techincals except simple support/resistance or fibs which has worked for me with quite a good probability of success. The above points are not exact, but are a “vicinity”. I think more “intelligent investor(s)” can run their own technical analysis and see what’s in the “Chart” based on the thoughts I am sharing above.

What to expect as we open on Thursday? Watch out for Albertsons'(ABS), Del Monte (DLM), National Semiconductor (NSM), Cooper Companies (COO), and many more. But the most important data point is Housing Data that is expected to release in less than an hr time (8:30am EST) and keep an eye on housing/mortgage/Sub-prime related stocks. You may research beforehand, determine entry/exit so as to benefit from the volatility.

Profitable trading, OP






2 responses to “South is “The” direction”

  1. […] Dow fell, touched 12550 range, then bounces back just like a classic text book example. Goog which at one time was down nearly […]

  2. […] an interesting crossroad. I was assessing potential turning points for the market and recalled my Aug 16, 2007 post. De Javu! I don’t think my views are any more different from what I had then, except that I […]

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