Sunday, September 14, 2008

Redux Follow-up

Around 7pm this evening the Dow futures were down almost 300 points. Of course, they could recover by the morning, but it looks like the expected selloff will be underway tomorrow. Confirmation will come when the July 15 lows are taken out.

Traders should keep in mind under these circumstances that the usual indicators of oversold conditions will not work in this type of selloff. Rather, look for climactic volume with large range days to signal short term bottoms. Also, be aware that due to the current cycle we are in, the ultimate bottom of this decline may not be until March 09 with a year end rally to separate a potential double bottom.

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