SUGGESTION FOR 401-K: WOW, I suspected that this week the 1250 level could be penetrated but so was the 1200 level on the S&P 500. The weekly bar actually closed just below 1200 this weak. This is obviously very bearish. My money was out last week before this decline. I hope you did likewise.
MORE ON THE LONG TERM TREND: Believe it or not, while things look pretty grim right now, technically the long term trend remains up. Take a look at the attached monthly S&P 500 chart. You'll notice a Zig Zag line which will plot up when the market rallies 10% or more from an important low and down when the market rallies 10% or more from an important high. There are two reasons I believe this bull market MAY not be over yet:
1) Notice how during the 2003-2007 bull market the S&P had three rallies of 10% or more before the final top. During the 2007-early 2009 bear market had three declines of 10% or more before the final bottom. Since March 2009 there have only been TWO rallies of 10% or more. Probabilities favor at least one more push of 10% before a final top.
2) Notice that in 2007 the third rally of 10% only made a marginal new high before the market sold off and the bear market began. In 2009 the third decline of 10% only made a marginal new low before the market rallied and the bull market began. Now in 2011 notice how much higher the second rally went than the first. The point is that most of the time the market will make some sort of double top before a bear market begins in earnest.
I'll be watching the market closely during the ensuing weeks to see how this plays out. Just a reminder to check your emails during the week as I plan looking for short term option opportunities. Be blessed!
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