Trendlines and trading
There is a new trendline that traders should consider on Monday open. The market has been in a downtrend following the collapse of the financial world and worries of a continuing recession. Many traders are calling for a late year rally as the volatility in the market ebbs and the fears investors.
The market action on Friday was promising. Overnight trading on Wall Street smashed the US indices after a news release of a $50 Billion Ponzi Hedge fund and continued fears that the automotive bailout was soon to fall by the wayside. President Bush addressed the nation and discussed alternatives to the Senate’s Nay vote including the use of TARP funds to push a bailout through. The Senate of course led by Republicans allied against the bailout after the House and the President showed their approval. Many are calling this a political move as the UAW and other unions across the country are decisively pro-Democrat.
While the call for an end of the year rally has yet to be seen, there is a small trendline just waiting to stump any more moves to the upside. This line appears on all indices and has been unforgiving in keeping stock prices lower.
This line, I believe, is the final straw to the end of the year rally. If it can’t be broken this week we’ll have to look for further movements to the downside as investors keep the indices in a sustained downtrend.
