Market Oracle T.A., Crescenzi Pod Cast on Treasuries

Market Oracles favors a bearish breakdown, but can not ignore Friday’s powerful rally…see chart

Using the Dow Jones Index as a proxy for other global indices that exhibit similar trend and patterns. Friday’s powerful rally cannot be ignored as it does imply that the recent peak of 8,400 is expected to be breached early next week, however heavy resistance lies overhead all the way to 9,000. This implies that the rally will soon run out of steam probably around 8,600 and therefore target a return to the tight trading range of between 7,900 and 8,400.

The longer the market continues to trade within the trading range of of 9,100 and 7,800 the more powerful will be the eventual breakout from the range, at this time probability still strongly favors a break lower with a summer bear market target of 6,600 as of 20th Jan 09. The far less probable outcome of an upside breakout would target Dow 10,300.

Again, I need to iterate that we are in a stocks bear market and the current action is a correction within the bear market. So whilst the moves higher are tradable, they do not at this point come close to signaling an end of the stocks bear market that is expected to resume towards fresh lows this summer.

Crescenzi Says Bear Market Developing for Treasuries- Pod Cast