S&P 500 Forecast - 10-03-2008: The Double Top Is Forming

Commentary

If you’ve been reading my market updates, then it should be no suprise that I’m bearish on this market.That said, I believe tomorrows market action represents a critical cross roads for the market. With the VIX (volatility) reaching levels not seen in 20 years, market and economic sentiment in the tank, and this “bailout” plan looming, I’m confident we’ll get a good guage on future market action based on what happens tomorrow

Overview

There isn’t much good news in the charts of the S&P from a technical standpoint. Just about every bullish sign the indicators could have been giving us are being washed away, and literally at this very instant, are about to go completely bearish right as we reach critical levels of support. Here’s my take on the charts, and why I believe this market has a long way to go down if we don’t get a strong bounce and close tomorrow

Technical Analysis

s&p 500 forecast for october 3rd, 2008

Click the picture to enlarge

Market Club Trend Analysis is showing a -100 rating, the lowest possible:
As of today’s close, we have broken through the downward trend line starting in August, 2007
Every moving average time period you can test is showing bearish crosses in mid length periods and the longer term periods are all rolling over
The ADX is currently reading 35.46, an extremely strong trend
All bullish divergence left in the PPO and the money flow index is just about gone, right as we about to break through support.
Volatilty in the market is sky high right now, meaning neither the bulls or bears have taken over, yet the S&P continues to plumment
The double top pattern in the S&P that I brought up is looking more and more likley to be confirmed
Take a look at the chart I brought up 2 weeks ago, and then look at today’s

s&p 500 double top pattern forming. October 2nd, 2008