Todays new moon in Libra has two components its the Jewish New Year and the end of Ramadan (astrologically its in a square to Jupiter and Pluto). Pluto in this context symbolises fear and debt, Jupiter in squares is overspending and not well based euphoria. Both are true by the events of today since the bailout package was introduced and the panic is now entering European banks on the continent but also on a global scale people are aware how helpless the administratin acts.
Coming to the technical situation we enter week 5 which has the potential to have a corrective nature to the upside but nevertheless the momentum is strongly to the downside and we have to go to 1050 in the SPX, which is the 62% retracement level and a strong support for this time frame. Tomorrow is the end of the quarter and all medium term charts will close on a weak bias confirming the downside momentum. Also the weekly SPX moving averages are close to have a negative cross of the 50 through the 200 week MA which is a very bearish call medium term. On the other hand we have extremely oversold short term conditions and a little relief rally is due at any time. We will see a rate cut soon and hopefully a concerted one with the EZB on board - its not possible to save the financial system and hold inflation in check at the same time. I am afraid the choices have dimished to zero - they had a chance for over 12 months - now its too late. Nevertheless the motto must be sell the rallies until we are 10% lower since its inevitable technically and fundamentally that markets have to adjust to lower earnings for the whole economy. Any rally should be kept to 1300 if it occurs short term but the probability is only given with a rate cut of 50BP since the bailout plan is priced in mostly.
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