What’s Next?

Published on January 21, 2009

What’s Next?

January 21, 2009

What a day that it was. This was the largest market decline ever on an inauguration day which also qualified as a 90% down day on both the NYSE and NASDAQ. According to Lowry’s, this was also the second 90% down day in just four trading days, after a hiatus of 90% Down Days since Dec. 1. While the DJI, S&P 500 and NASDAQ all suffered sharp losses of 4%, 5% and almost 6%, respectively, S&P Mid and Small Cap or Russell 2000 Indexes fell by 6.00%, 7% and 7%. Based on yesterday’s action, the probability of a retest of Nov lows have increased. Unless Dow rises significantly from here, it seems this Jan’09 is going to be a down month.

This is the warning that I sent out to OPN members on Friday 1/16, that I shall mention again for the benefit of OPN readers-

Recall sometime back I had mentioned about the importance of 10,700, in early sept’08, and to stay away from the crash on the way….I don’t know when is the next one..but what i do feel is that… if Dow is headed to close below Nov lows (7500), stay away from the markets…that’s as simple a technical analysis as I could share..

Here is the news from bloomberg, confirming my thoughts, if 7,500 is gone, embrace 6,000. I shall add to that, if Transports also break below it’s Nov lows, just stay out of the game (from my perspective)…

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a9M5TXuo9l1Q

Trade very carefully, markets are becoming complacent, but there is no room for complacency. Whatever rallies we saw from Nov low, it is driven by withdrawal of supply, not due to fresh demands…

Though these are the times to make money, but then losing will also be quite easy. Pls dig dipper for information, find out the “facts” and only then commit funds if you need to, for long term investing…don’t buy just on “tips”..

I mentioned this on my InvesCafe portal as well. Both the transports and Dow are not very far from those lows. And I shall urge my readers to stay cautious, in fact very cautious. I hope some of you were able to cash in a few opportunities I mentioned on the InvesCafe. There is no harm in waiting for a few days to better interpret market action.

We are opening Feb’09 Income portfolios for OPNewsletter, pls click here if you are interested to Join OPNewsletter.

Trade very carefully, Profitable Trading, OP

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