Hello, just a quick post about the Holiday volume. We had a nice rally during the Holiday week. Usually that is the case during the Holiday period. November and December are usually very good months for the market.

My last post stated that if we broke the support of the week before last, that we could get another significant drop of 1 to 2 thousand points. Well, the next day after that post, we broke that support and dropped 1,000 points exactly and then we started the retracement. We are coming off a 5 day market rally as of today. A retracement again is under way. I am expecting this big decline today of almost 9% to hold. Another drop of about 15 S&P 500 points and 150 Dow Jones points to the downside tomorrow morning and then we need to see support come back into the market. if we can hold this area, we will have a very good chance to mount another meaningful rally of over 1,000 point plus on the Dow and 100+ S&P 500 points.

As I first started out mentioning, the light volume around the Holidays is typical market behavior. The big players usually take off during this time of year and it would appear that this year is no different. The market tends to be very jumpy during this period, because there is no real large volume behind it. The big boys are gone and the retail players are left pushing up and down without conviction. The trend is hard to get established and jumps up 2 points, down 2 points all in one breath. Its a little hard to trade without getting stopped out, especially if you are using only 1 point stops.

Bigger volume should be coming back sometime later this week. It’s not that the market does not move, it’s just that it is easier to manipulate and get pushed around and it’s easier to move because you don’t have the resistance from big players moving against you.

Well, let’s hope this market stabalizes for now. I would expect the market to hold up until the end of the year. Sometime eary next year, I am afraid we are going to go down again for another big lasting drop. The worst is not over, unfortunately. But remember we are not predicters, but interpreters. We read the current market action and we react accordingly. The market is always right.

I will start trading again in 1 or 2 days when the institutional players return and volume comes back into the market. Below is a chart of the S&P and the Dow, to show you where we are. I would like to see the downtrend line on the outside get broken to the upside. This will be the first indication that we will have some time on our hands and the market will start to put in a bottom. This is only going to buy us some time and will not be the final turning point, but that is just my opinion. There again is a good chance this will take us into 09 if we can overcome that resistance. But let’s start with tomorrow and shake out the week hads early in the day, only to close flat or higher on the day. That will be the first task at hand.

http://www.screencast.com/t/GzLjaJ2W