NDX - market outlook

The NDX daily chart on the left has the same price pattern as the recent SPX chart - we made it to the resistance line and briefly above the 50 day MA. 1250 proved to be a valid resistance for now and we are heading now for 1150, which should hold for this year, as we can expect next week rather an upside window dressing move. The real test of market direction is due early next year, as we will be driven by 2 major events- the $1 trillion aid package from Obama which will be accompanied by new announcements from Europe and Asian countries coming up with big spender pockets -against a horrible earnings season. From a technical point, we need to test the low once again to create a another rally and even a stronger one against all the logic of fundamentals - that might happen in January or latest by February, as we get to a time frame with a strong bounce potential. Reality will be seen as soon as people recognize that the 'R' word might have to be replaced by the 'D' word as the latest Barron's survey shows that people are a bit too much upbeat about the prognosis. But that is due in the 2nd half of 2009 as against all the programs economies might still deteriorate further. These markets need to drop a lot more in 2009 to reflect a value which is worth investing in which is roughly half of current levels.