Friday, May 21, 2010
Flash will 1044 on the S&P hold?
The 52-week high for the S&P 500 is 1219, while the 52-week low is 869. In a normal correction it is reasonable to look for a magnitude of down of 15% to 20% for a serious correction. A 15% decline would take the S&P 500 to 1044 while a 20% decline would take the S&P 500 to 975. The low for the day as of the time I wrote this flash was 1073.
I would not be surprised to see a further move to the downside to test the 1044 level and then a strong rally off of that level. I still believe that, as I said in my earlier flash that we will test the 950 to 975 range sometime this summer.
I know it is hard to believe, but there is still to much hope in the market. Each day we go down with no upward momentum people will become more and more pessimistic till we have the final blow off when people say “sell me out”. The hardest thing to do is to sit and watch the market grind itself down every day. As I have written many times in the past, we can’t let our emotions get in the way and right now and perhaps for a few more days emotions control the market.
We have been trough times like these before, they are no fun, but we made it through before and we will do it again.