Wednesday, February 6, 2008
We will have a Volatile Meandering Trading Range Stock Market in 2008
Are you experiencing a wild roller coaster ride in the US Stock Market in 2008? It is not over yet.
Near the end of June 2008, the S&P 500 ($SPX) formed an intermediate bottom of around 1270. As expected (this blog wrote about the re-tracement), the S&P 500 had a 38.2% to 50% Fibonacci retracement rally to around 1400. The re-test of 1270 is currently expected.
At that point, the S&P 500 could pass or fail. If it fails, we could establish new 52 week lows and go down to 1220. Or, the S&P 500 could pass and bounce off support of 1270. Potentially, during a bottoming process, the S&P 500 could re-test 1270 several times.
Depending on how things go, the S&P 500 could break resistance at about 1400 to 1424 and form a new higher trading range.
Whether up or down, the market in 2008 is expected to be a meandering, trading range bound market, with a possibility of even more breakdowns below 1270 on the S&P 500.