MARKET COMMENTARY

It was a chaotic trading on Wednesday. Basically, everyone in the market sells. The financial sector has been in total ruin despite the Fed’s intervention. More banks are under spotlights for scrutiny for possible failure. Immediately, Morgan Stanley has flashed the red light when they seek fund from the Chinese. This is still underway.

The Dow has lost another 449 points. It suggests that the market turmoil has not ended just yet. But for Thursday, we can expect a rebound. This should be a healthy sign after almost 1,000 points had given up and more than US$1 trillions of asset value had evaporated. However, don’t count on the market to return to the bullish trend yet. It is still searching for the bottom. Sell on rebound.

I have never stopped expecting the market to slump further ever since the subprime issues surfaced. Bad as it may, the market is still higher than the low from October 2002. Yes, there is still room for more selling! For now, I set 10,000 for support. That means we have another 600 points to go.

One thing for sure, the US economy is in recession. How it spills over to other regions remains to be seen.

DJIA Daily Chart

Russell is falling in straight line without pause. It may rebound somewhat. But I see the bottom at around 660. Sell Bear Calls on this index above the resistance when it rebounds later.

RUT Daily Chart

The question for the Nasdaq is not about falling - it is falling hard - but rather when it will break the down trend line to halt the slide. Since it does not rebound, there is no window of opportunity to take position. Wait for that moment. It is very oversold now.

NDX Daily Chart

STOCKS TO WATCH:

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