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It seems that the global economy is taking its toll on our market here. Asian markets (Hang Seng Index) have been down over 6.4% since its August highs of $21,074. The Hang Seng is now making a new low for the month at $19,724. This gives a bearish picture and support area is still another $700 points away around $19,000. The Asian markets rallied along with ours but has had a tougher time maintaining the rally. It seems our markets have been able to hold us at pretty fair levels. Last week, we saw a nice consolidation and hopefully the global sell off can be contained. We will be looking for positive news this week from anywhere we can get it. Earnings, economics, mergers or buyouts could easily be the talking points to shy away from the negative Asian markets.
We still see very high risk of market problems. The underlying credit problems have not been fixed. The commercial real estate bubble may be much larger then anyone can anticipate. We have had a nice run in the market, but the fundamentals have not shifted positive yet. Unemployment is still greater then 9.4% and foreclosures rates are still increasing.
From a technical viewpoint on the SPYs, we have two support areas that are critical. Our past resistance $101.5 turns into our support level. Then the most recent lows of $98 become critical to hold if we do fail. A small retest in this area will most likely hold as long as the Asian markets do not continue their slide. If we do break these levels, then we could be in for some serious retests of June- July levels.
Economic
Earnings
Stocks > $2.5 and Volume > 500,000
