The December Mini S&P is down 4.5 points this morning at 1057.00 as I write. The enclosed chart shows that the uptrend that began from the lows in March is still intact. I have drawn an intermediate trend line coming up from the mid August lows through the early September and early October lows. That line comes in right below the lows of the last couple of days near the 1040.00 area. I would expect that there are a lot of sell stops below that level that could send prices down towards the 1000.00 area. But the line held yesterday and the market rallied sharply. So, the question is the same as in many commodities this morning; Is this the beginning of the resumption of the major trends? Who knows. If it is, then fine. If not, great, then I want to see some more testing of yesterday’s lows and then another reversal. If I see that, then I want to get a lot more aggressive on the long side. For now, I recommend standing aside in the S&P. We recently took a nice profit out of the S&P and we will enjoy that for awhile longer. The larger than expected GDP number yesterday was largely responsible for the rally. Let’s see if the market can follow through on that news today. The corrective action over these last several days of October look very similar to the corrective action at the end of both August and September, prior to prices rallying to new highs. I want to see today’s action and into Monday before doing anything yet. The directional movement indicators are bearish and the ADX line is still dropping. I need to see that cross back to the bull side before I do any new bullish trades.

Oct. 30, 2009
David Hall