Kind of expected the day after but that shows how much dislike the market is with the Fed's 25 basis point cut. Now the reverse H&S is broken and come to think of it, the right shoulder was kind of in a hurry. The market was at OB before FOMC and never understood why people would still buy going into the meeting. This is Oct31 all over again, the Fed still worried about inflation and hinting no more rate cut and this will put a damper on the market. The highs of Oct11, 31 and Dec11 form a resistance line which is stopping the advance of the market. The original forecasted 710 was good and it is always important to realise the market will reverse in between 61.8 to 78 Fib retracement. Today is approx 0.38 retraced from the rise from Nov26 and is sitting on forecasted value of 690. If the uptrend is strong it may bounce tomorrow, however, right now with the market sentiment, there is no reason to believe that it will change overnight. A conservative target would be 50% which takes us to 680 and tomorrow's numbers are 705, 698, 684 and therefore, if it continues downward somewhere around 680 to 684 sounds right. But then again the brokers will be coming out with earnings this week and may be they will lead us further down. Was waiting for the infamous FOMC 1,2,3 pattern to realise today before shorting but shorted the market anyways when the pattern failed.
More thoughts tonight....could not help but thinking about the weekly OEX chart which is forming a H&S right shoulder. The left shoulder started from Aug13 this year. Now if this H&S materialised the neckline is 676 and the projected target will be OEX 58 points down from 676 taking the market to OEX 618 which is lower than 624 of March 12 this year and this is what Bradley Model is predicting by Dec 22, only 10 days from now. A drop of 72 OEX points and DOW 1440 points to DOW 12000. Just dream on for now...
2c
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