Wednesday, September 17, 2008

Meltdown Alert

The possibility for a full fledged financial meltdown exists. It appears that the guiding forces in the Bush adminstration have lost control of the US financial markets.

The potential for a "market holiday" should not be discounted.

Any optimism in yesterdays post has been nullified by todays decline. The conditions required to signal a durable rebound failed, The A-D difference has blown out the 10% below my threshold.

At 12:30 on Wednesday the raw numbers are:
adv 196
dec 3034
A-D diff -2838 <== needs to be above -1400 to keep the 10% above -500

the 10% -635.52 <== whoops
the 5% -371.80
the MCO -263.72 <== bounce level oversold

It is unlikely these conditions will change substantially before todays close. The indicators are oversold enough to cause a snap back rally but any bounce higher is just relieving the oversold condition and not the start of a new leg higher.

Any forthcoming rally will fail and require a retest of the lows later, probably closer to the end of the year than in the following few weeks.

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