Technical indicators aside, from a macro view i think the bulls are completely and totally screwed here. Let's take a look at a few things:
PE ratios on tech stocks are still way too high, double what they should be even after getting crushed. Historical PE for stocks as a whole is around 15, PE for S&P is around 40.
The dollar is in freefall and could be setting up for a multi-year decline, which is freaking out foreign holders of US investments.
With the dollar cracking wide open we have the setup for a highly inflationary environment, which will require raising interest rates. But the fed will find that raising rates in this environment will kill stocks like raid kills cockroaches.
As foreign inflows and public inflows into mutual funds ceases and even turns net negative, mutual funds will start selling every day instead of buying every day. The virtuous cycle of incoming capital put to work will turn viciously in reverse.
As the public starts realizing their 401K's are toast and boomers realize they are going to be retiring on peanuts, spending will decrease dramatically. Bankruptcies will keep rising, as they have already been for past year or so.
All over the country there are housing bubbles waiting to crack. Hundreds of thousands of people have taken out second mortgages and spent the money. What happens to all those folks when their mortgage note is suddenly worth more than the value of their house? The US has actually had a net NEGATIVE savings rate for the past few years.
Short term traders don't really count because we are in and out so quickly, but in the battle of the elephants, the bulls are in deep trouble. They've spent a lot of dollars bumping up the last few declines. This has killed off weak shorts in the process, leaving mostly strong and pissed off mega grizzlies in the ring. They tried to kill the bears with multiple shotgun blasts and now the cartridges are empty.
Then on top of everything else, we can count on the government to somehow make everything worse. Not sure how but they haven't let us down yet.
We might see some rallies here and there, maybe even a few that last for more than ten minutes. But they are basically not much more than sweet honeycombs for the ursine crowd.
You don't just have the biggest bubble in history where cab drivers are making a mint and then get off easy. Greenspan blew it bigtime with all his easy money, and the Y2K money infusion made it that much worse.
Short term bounce/tradable rally? Maybe. But the big picture, technical analysis or not, is awful.
Bad bad mojo. There is one ugly piper to be paid.
