Hope Looms

February 22, 2008

What looked to be another horrendous day for the bulls, and overflowing excitement by the bears, turned in to a bloodbath for the latter as they ran for the exits in the last minutes of the market session today. Rumors of an AMBAC bailout lifted investor hopes and actually allowed for the S&P and Dow to finish slightly positive for the week. While this type of news will get investors undoubtedly excited for next week, caution must still be urged. At this point we are talking rumors, and even though ‘where there’s smoke, there’s fire’ we have to be very careful in not jumping on this bandwagon right away. If the news is legitimate and ends us being exactly what the market needs to change the sentiment going forward, then there will be more than enough opportunity to go long with the rest of the market. So be patient with your entry prices in the days ahead.

Let’s review the charts…

While the NASDAQ had a solid reversal at the end of the day, it wasn’t to the same extent that the other indices were able to experience. On that note, we still need reasonable evidence that the lows put in during mid-January were legitimate. At this point, we have not gotten any kind of confirmation of such and it is still necessary that we test those lows.

CLICK HERE FOR THE NASDAQ CHART

S&P had a great day, considering how the market was shaping up towards the end before the AMBAC rumors hit the wires. Ideally we would like to break out of the downward channel the S&P finds itself still in, before we start reconsidering our outlook on the market.

CLICK HERE FOR THE S&P CHART

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