SPX LT

SPX LT View: During Mar2000-Oct2002, SPX corrected 50% of 20 year rally even though the LT chart does not visually show the severe correction. During the last 10 years, markets have consolidated the 1990s rally.

We have bears just waiting for markets collapse as bear market correction is often fast which is taking shorter time to mark down to attractive price level.

Breaking the current support, technically, we are in bear market discounting prices ultimately to SPX 970 +/-, DOW 9000 +/-, Nasdaq 1700 +/-, and Qs 27 +/-.

Holding the current support, markets will rally back up which is a bullish case even though, with the current negative sentiment, it looks to be impossible to see new bull market high level. This is the test of low SPX 1270. In this case, we would be seeing truncated wave 5 of A-B-C correction ending Wave IV.

Test of Jun 2006 low to SPX 1225 +/- will be completing wave 5 of A in bear market.

I noted that the last week was a turn week and the next major turn is in Jun 2008. Therefore, with oversold market condition, we will see whether we will be seeing support at this level.

Markets were fed with bad ARM crisis news with write-downs. Considering negative sentiment, we do not have any reasons that markets will turn bullish at this point unless we see significant comments from Bernanke during the next Fed meeting which is on Mar 18. Bernanke lately was playing words games such as he does not see "recession" and we have not heard negating his opinion even though he said that he would not know that we are in recession until it is too late, meaning, he does not want to admit that we are in recession and create further turmoil. This is the same as Paulson promoting strong dollar while dollar is trading lower making historic low prices.

Bernanke would lose credibility if he continues to deny that we are in recession and would not want to lower interest rate. He is squeezing consumers putting more pressure by not lowering interest rate in favor of pro-higher-interest group.

In summary, we have two key supports: SPX 1270 +/- which is retest of 1/23/08 low or SPX 1225 +/- which is 6/14/06 low.



My LT Analysis

I have commented on LT view on my previous posts during the last three years. Now we are at critical juncture which will confirm that we are in bear market.

As shown on the LT chart, Markets have corrected about 17-19% during Jan 2008 reaching the targeted SPX 1270 +/- which I noted on my previous comments.

While I was noting a possible reversal from the Jan 2008 bottom rallying to SPX 1600-1650 which were the SPX breakout targets noted during the last year; SPX has failed the break out above SPX 1550 March 2007 top.

Given the ARM crisis and Economic data which we are subsequently hears, we have no or little hope to form a bullish sentiment at this time.

The pessimistic news is continuing to feed the markets and traders since the Jan 2008 bottom causing the recent consolidation period remaining in very tight trading range.

After remained in a tight trading range for one month since 1/23/08/, markets sold off 7-8% during the last 7-trading days, after making lower-high on 2/27/08.

Bush and Bernanke claims no recession. With breaking the current support, we are sure to see fast acceleration of bear market which will likely cause a serious recession. A serious question is "How hard the recession will be".