Quote from austinp:
On a short-term basis, the market is setting up for a monster rally event. If it ignites intraday, don't be surprised if they ramp +50pts ES (or more) in violent fashion. Late July 2002 was a 70ish point intraday ramp from low to high. We'll probably see at least one of those this year as big or bigger.
But, many of the coming rallies will be completely reversed the next session or two at most... especially a surprise rate-cut event. See Jan 2001 and April 2001 for the results each time.
Some rallies this year will stick for weeks, maybe longer. Expect everyone waiting with baited breath to proclaim a bottom is in, bear market is dead, etc.
We can also expect lower lows, grinding selloffs and overall sector deterioration. Stock markets have suffered a triple heart attack and paralyzing stroke here in the first two weeks of 2008. Anyone who thinks they'll be ready for spring-training wind sprints anytime soon is deluded, to be kind.
Welcome to the early stages of a true bear market. Make the necessary adjustments to what you saw today and sessions prior. We'll be served a steady diet of them.
Enjoy the bear-market rallies when they ignite. It is something to behold, while they last. Review your charts from April 2000 ~ Oct 2002 for a refresher course = road map of overall general behavior to come.
There is a multi-year bottom out there ahead, somewhere below today's session low. Probably much further below than most active traders = investors can possibly fathom.
Time will tell... it always does
