Are The Bears Retreating?

15Jan2009 - PostMarket Review

my take on the US indexes for Fri... whilst clearly, spx and dji have both crossed below some important support, the situation is really oversold (on the hourly basis), which is poised for some rebound. and this was what happened last night. after mid day, all indexes staged a very powerful rally...i say powerful because that rally that started around 1pm was relentless in the upward surge.. it was very clear and decisive. some short term resistances found on the hourly, were easily subdued...again a sign that bears retreated to the woods... this means, the sellers were exhausted...and the buyers took reign (see below)

SPX - 15 Mins Chart


what is critical here is that, for the SPX, my TA indicates an important resistance of ~850 that needs to be cleared..

if today, we get to clear this....then momentarily, the ominous cloud will disperse paving way for some clear blue skies for next week...

a quick review of DJIA also shows a long term support holding up indexes from free diving further, at least this happened on Thurs session. this is good news for the bulls.

DJIA - Daily Chart


and finally, it might surprise that the VIX coincidentally reached MA50 and fibo 50% retracement resistance at ~54 and promptly retarded to close at ~51....all this is saying, is that panic and fear may be contained.

if you compare the VIX reading when spx and djia were at this level last year, VIX was ~70. today it is ~50....same index level, less fear...this is what VIX is telling us of this market even with a week's worth of negative index readings.

VIX - Daily Chart


so, i really, will not want to be too bearish at this stage...not unless, i am betting that last night's rebound is purely a short covering... but really, not likely, market short covers from 1pm until close...
in fact, given last night's performance and the above indicators, i am more inclined towards being neutral to bullish bias.
of cos, the deciding factor will be tonight's performance. this is terrific timing for me. options will expire today.
so, next week, i can look back and trade alongside the market direction.

good luck and i wish you all HUat HUat !!!!

Kennynah (Singapore)