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Stock Market What's Next? The Obvious Take

Stock-Markets / Stock Markets 2010 Jun 30, 2010 - 09:24 AM GMT

By: Guy_Lerner

Stock-Markets

Best Financial Markets Analysis ArticleThe "fat pitch" that was looking good has fizzled into a stinky, foul ball. In all likelihood, we are looking at a bear market.

Tuesday's horrendous and high volume price action has led to a break below our key pivot points. A weekly close below these support levels represents a failed signal. Failed signals generally are a hallmark of a bear market. Thusly, there is significant downside risk.


So what is next? The most likely outcome is a bear market. Our support levels on the SPY (107.58) and on the QQQQ (45.01) are now resistance. For the intermediate term investor - not traders looking for a 3 day bounce -there are two instances in which I would go long this market:

1) if prices on the major indices close above resistance (old support) levels

2) investor sentiment becomes extremely bearish (i.e., bull signal), and within this context of another "fat pitch", I would consider the long side provided I had the necessary risk controls in place.

Over the short run, the market is oversold, and as we come into the quarter end and July 4th holiday, I would expect a bounce. Unless prices close above the mentioned resistance levels, I would look to unload any market correlated long positions into this lift.

In the next article, I will provide an alternative take on the technical dynamics in the market.

I have posted charts of the SPY and QQQQ below showing key pivot points (i.e., red dots) which are areas of support and resistance.

Figure 1. SPY/ weekly

Figure 2. QQQQ/ weekly

Improve your market timing withPremium Content from TheTechnicalTake. For a nominal yearly fee, you will get a unique data set that will show you which way investors (i.e., bull market geniuses) are leaning.

It is independent and original market analysis. To view a recent report click: REPORT.

By Guy Lerner

http://thetechnicaltakedotcom.blogspot.com/

Guy M. Lerner, MD is the founder of ARL Advisers, LLC and managing partner of ARL Investment Partners, L.P. Dr. Lerner utilizes a research driven approach to determine those factors which lead to sustainable moves in the markets. He has developed many proprietary tools and trading models in his quest to outperform. Over the past four years, Lerner has shared his innovative approach with the readers of RealMoney.com and TheStreet.com as a featured columnist. He has been a regular guest on the Money Man Radio Show, DEX-TV, routinely published in the some of the most widely-read financial publications and has been a marquee speaker at financial seminars around the world.

© 2010 Copyright Guy Lerner - All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

Guy Lerner Archive

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