When looking at the indices charts during our 10/22/08 Meetup, there was discussion of "Pennants" with potentials for breakouts to either the upside (rally) or the downside (deepening correction). Kent Tomaselli has sent the following timely commentary that talks to that issue. THANKS Kent.
From: HS Dent
To: kent310@msn.com
Sent: Friday, October 24, 2008 2:10 PM
Subject: HS Dent Forecast Update
HS Dent Forecast Update Friday, October 24, 2008
What a day! The futures were limit down this morning, then the Dow smashes down and tests the 8,200 support area we recently mentioned and then a modest bounce. There have been new lows on many markets from emerging markets (EEM) to the Nasdaq. Hence, we probably are heading lower into the Fed meeting early next week. The markets could be tracing out a broader wedge with the bottom trend line at 8,200 and a declining top trendline coming down from the 9,800 and 9,300 tops recently. The markets could rally back up towards 8,900 - 9,000, test that top trendline and then fail more dramatically, potentially into the 7,100 - 7,500 area. If the market could break above that downward top trend line, say above 9,000 today or 8,900 on Monday, that would be the first sign that the bottom could already be in and a sharp rally ahead. Hence, the next few days is very critical and the markets are still likely to break upward or downward more sharply. The bias is clearly to the downside scenario at this point, unless we break above 9,000 today or 8,900 on Monday.
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