Support Broken...But Look For A Bounce

The SP 500 closed Friday at 1073.87. That is below the support levels of 1085. Some say its 1085, some say 1083, and others seem to think 1080. Support levels are very subjective and they can be tricky, but anyway you look at it the Market is broken. The next support level to look at is in the 1030-1040 area. This is some 400 Dow points away. I still believe the Dow will test 9000 before we an intermediate term bottom.



But markets don't go down in a straight line unless we are in the midst of a 10 Sigma Event. According to the market playbook, once support is broken a feverish yet feeble attempt to rally will only reach the prior support levels. This is because support once broken becomes resistance. So I expect a market rally for today right back up to 1085 or so on the SPX. Once we get there I am sure will sell off and head back down to the next support level.

The market is so random that short term predictions make you look like a fool. I just spoke to a buddy of mine who is quite bullish here currently. He thinks technical analysis is all smoke and mirrors with a little voodoo sprinkled in. I did ask him then if technicals are voodoo? What are the fundamentals?

He hung up.