Market Analysis and Forecasts as of 2/25/2009

Markets traded in light volume and sold off going into close as alerted at 3:40pm -- creating trading volumes with the volatility.

No comments as markets are too manipulative in a day trading environment. Markets are unstable with high degree of manipulation.

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http://trend-signals.blogspot.com/2009/02/market-analysis-and-forecasts_24.html

Markets formed H&S formations reversing from yesterday low and bounced up from the yesterday closing of SPX 743.33 with today's bounce to SPX 773.14 as signaled. http://investorshub.advfn.com/boards/read_msg.aspx?message_id=35821018

A critical million dollar(s) question should be focusing on the market actions for the rest of this week to obtain a confirmation for successfully retested bottom for meaningful market advance.

Further demolishing financial markets will not add any benefit than it has already done as many are already cleansed out of the excess and lessened inefficiencies as we can see the high unemployment rate. From a long-term view, the current unemployment rate is comparative to the rate during deep recession periods such as the adjusted unemployment rates of 9% and 10.8% in May 1975 and in late Nov 1982; however, the destruction of the financial sector is unprecedented.

The Bernanke comment on 2010 economic cycle is in alignment of long term economic cycle bottom as noted during 2006 market comments regarding 8/8.6 cycles.

Fractal formations: Markets are showing multiple fractal H&S formations in long term (since 2006) and short term (since Nov 2008)

Price and breadth positive divergences: not only market price actions show positive divergences (+D), breadth is showing +D. The $NYMO breadth chart is one example. Similar as market breadth showing +D, underlying market sentiment is showing slightly improved sentiment as noted on the COT which it is, in my opinion, a sign of commercial and large hedge funds are fading markets. This does not bode well as our economy is in verge of falling into deeper recession or depression. While extreme bearish formation scenario projects to SPX 500-600, the Technical analysis based on various methods are varied among which the EW wave formations can vary giving us different price projections.

SPX 720 +/- which markets reversed is the pivotal and critical support at which markets bounced from the support closing at 773.14.

For a retest of the bottom scenario at the supports, DOW is showing a fractal formation of several previous lower-low double bottom formations with slightly different formations as those can be seen very long term charts.

VST (very short term: intraday-a few days): Pivotal support at SPX 720 +/- with a confirmation during this week to SPX 800
ST (Short term: a few days – 3 mos) : Pivotal
IT (intermediate term: 3 mos – 1 yr) : Trading range
LT (long term: 1 yr – 3 yrs) : Long term trading range
VLT (very long term: 3 yrs – decades) : Bullish


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Recessions: 1973-1974 40% +/-, 2000-2002 40% +/-, 2007-2009 46%+/-
We are now passed the 1973-1974 40% recession sell-off as markets are sold off 50% from the Oct 2007 top into 17 months recession. Each recession period has different reasons and characteristics, while it is interesting to compare the major recession periods, the fractal formation analysis is not trading signals; therefore, it should be treated as such, not as trading signals.

Per NEBR, The major recession periods are:
9/2/1929-7/8/1932 (34 months)
1/11/1973-10/3/1974 (31 months)
3/24/2000-10/9/2002 (30.5 months)
10/9/2007- (17 months)