Stock Market
All comments and Stock Market Ananlysis are made by Guy Brumley. Guy has been trading the Stock Market daily since 1992.
Trading, evaluating stock prices and predictions
Market Commentary 2-18-2009
Today, we have two days left on option expirations on equities for February, and the market is looking for any positive comment to stage a rally back to the 7800 level.
It looks like the 7500 area should be the center point for the next two days. If we drop to 7200 (which is the 2001 low), this week, I expect a quick rally back to the 7500 -7800 range. This makes quick money for traders that are willing to gamble on the “at the money” put and call options.
I really think the fear level (meaning VIX) is moving back into the 100 level. This should coincide with a breakdown of the DOW to the 6950 area. The long-term trend is still down but the oversold nature of recent trading could give a dead cat bounce and a hard rally up to 8000. The problem is the any rally is being funded with less and less money. All the trading institutions are bleeding cash, the average person’s retirement fund, 401k has already become a 201k and will be looking like a 101k before the capitulation we need for a buying opportunity bottom to appear.
The critical numbers for the DOW are 7200, 6950, possibly 5800, and 3800. We need to keep the 5000 area as psychological support. The period we would use is the 4-year cycle, which puts the next bottom in 2010.
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