Domed House Update

Here is a daily chart of the Dow Industrials showing my interpretation of the market's action in terms of George Lindsay's Three Peaks and a Domed House formation. I commented on this chart yesterday and I don't have anything new to say. However, yesterday's big drop has caused me to redraw the estimated future path of the average a little bit.

Bear Market ???

Here is an image of today's front page in the New York Times. The headline reads "Slide on Wall St. Adds to Worries About Economy."

I couldn't find an image of the Chicago Tribune's front page (added later: Mike pointed me to the image of the Tribune's front page you see above; thanks, Mike!) but the headline read "China Market Plunges, Dow Follows. Now What?" The front page of the Tribune's business section was devoted to yesterday's mini-crash. Three subheads in this spread were: "Global Markets Plummet", "Some Traders Fear the Worst", and "Analysts Argue Sell-off Could Be Reality Check, Sign of More to Come".

But the most interesting development occured last night on NBC's Tonight Show with Jay Leno. Leno opened his comedy monologue by observing that if you had money in the stock market, you didn't anymore because "the market dropped 500 points today".

Now I have found the New York Times and the Chicago Tribune to be reliable fades, especially when they highlight bearish news. But the most reliable fade of all is Jay Leno. During the summer of 2002, the greatest buying opportunity of the past 10 years, Leno made jokes about the stock market almost every night, all along the lines of how much money investors were losing.

Remember that the mainstream media are in the business of telling people what they want to hear. They are at the same time opinion leaders and opinion formers. With this in mind I think it is safe to conclude that the drop from last week's high is NOT the start of even a 15-20% decline. Instead I think that most of the drop has already been seen and that the US stock market will make new bull market highs in the weeks ahead.

Guesstimates on February 28, 8:50 am ET

Spiders - March S&P Futures: I am expecting the S&P’s to rally to 1425 and then drop to 1380 before a move to new bull market highs can start. The Spiders should rally to 142.50 and then drop to 138.00.

QQQQ: I expect The Q’s to rally to 44.30 and then drop to 42.80 before a move to new bull market highs can start.

TLT - March Bonds: The lows made on January 26 will hold. TLT is now headed up into the 94-95 range. The bonds should hold support near 112-24 and then rally to 114.16. Over the next few months the bonds are headed for 120.

March 10 Year Notes: I now believe the notes made their low on January 26 and are now headed for 111. Short term support is at 108-16 and the next upside target is 109-18.

Euro-US Dollar: The euro has developed a little more strength than I expected but the 132.60 level is strong resistance. From there I expect another downleg to start.

Dollar-Yen: Support is 117.50 and the next upside target is 123.60. I expect to see the yen trade at 130 in 2007.

OIH - USO - April Crude: OIH should soon drop to 129-130. USO should drop to 45. Resistance in April crude is at 62.50 and from there the market should drop to 55.00.

GLD - April Gold: I think that both GLD and April gold are very near important tops. An extended drop will start soon.

May Silver: Switching to the May contract. Silver has resistance at 1475. Its bear market will resume soon.

Google: Support is now in the 445-50 range. Google is headed upward to 564.

Panic !!

Here is an hourly chart of the Spiders. The S&P futures look pretty much the same. I commented on these markets a short while ago.

Instead of rallying from 141 the Spiders broke all the way down to my 139 target for the entire correction. Today's selling I think is climactic rather than the start of a much bigger drop. It seems an awful lot of people were trying to squeeze out the door before it slammed shut on the remaining bulls.

So I think that the next development will be a rally to the 142.50 level. Following that rally I think we shall see another break to 1390 or a bit lower, but that should be it. Once the smoke clears I shall be looking for a move to new bull market highs.

Stock Market Update

Here are hourly charts of the March S&P futures, the Spiders, and the QQQQ's. I last commented on these markets this morning.

The drop from last Thursday's high has been much bigger than I expected. In fact, it is the biggest break since the drop last July which tested the June low in the S&P. Frankly, I doubt that the bull market has ended. Today's bearish advertising is a bit too obvious and has the feel of the crowd bailing out at once.

Nonetheless, corrective waves generally have three distinct phases, so I do not think that the drop is complete. Instead I expect the S&Ps to rally 25 points or so from support at 1410 and then to drop to 1390 before resuming their bull market advance. Divide these numbers by 10 to get the corresponding levels for the spiders. I think the Q's will hold support near 43.20, rally a point or so to 44.30 and then drop to a final low near 42.20.

Domed House in the Dow

Here is a daily chart of the Dow Industrial average going back to last summer's low point. On it I have numbered what I think are the turning points in a developing Domed House formation which is part of George Lindsay's Three Peaks and a Domed House pattern. I last commented on this subject here.

The break in the Dow over the past few days is in my opinion big enough to identify the last high as point 21 of the Domed House. Point 22 is probably developing right now and should be followed by a rally to the 13000 level in the Dow at which point I think point 23 will form. Right now I shall stick with my guess that this high will develop in late March, but there is still an even chance that point 23 will be delayed until April or May.

S&P's, Spiders and QQQQ's

Here are hourly charts of the March S&P futures, the Spiders and the QQQQ's. I last commented on these markets here.

The markets opened below support that I cited in this morning's guesstimate so I think the reaction will be as big as the 31 point break that ended in early January. My exact estimate for the low in the S&P's is now 1431, for the Spiders it is 143.10 and for the Q's it is 43.90.

I still believe that this is a normal bull market reaction and expect to see new highs during the next couple of weeks.

Guesstimates on February 27, 8:50 am ET

Spiders - March S&P Futures: The last two reactions in the S&P’s were 23 and 25 points. On that basis I expect this morning’s break to end in the S&P’s near 1440 and in the Spiders near 144.00. The next step upward will carry the Spiders to147.00 and the S&P’s to 1470.

QQQQ: I expect to find support near 44.40 and then to rally to 46.40 and later into the 47-48 range.

TLT - March Bonds: The lows made on January 26 will hold. TLT is now headed up into the 94-95 range. The bonds are headed for 120. The bonds have reached the short term upside target at 112-16 and are likely to stall for a day or so before heading higher.

March 10 Year Notes: I now believe the notes made their low on January 26 and are now headed for 111. The market has reached its short term upside target at 108-08 and will probably stall for a day or two before heading higher.

Euro-US Dollar: The euro has developed more strength than I expected yesterday but the 132.60 level is strong resistance. From there I expect another downleg to start.

Dollar-Yen: Support is 118.60 and the next upside target is 123.60. I expect to see the yen trade at 130 in 2007.

OIH - USO - April Crude: OIH should soon drop to 129-130. USO should drop to 45. Resistance in April crude is at 62.50 and from there the market should drop to 55.00.

GLD - April Gold: I think that both GLD and April gold are very near important tops. An extended drop will start soon.

March Silver: Silver now has resistance at 1475. Its bear market will resume soon.

Google: Google is headed upward to 564.

S&P's, Spiders, and QQQQ's

Here are hourly charts of the March S&P futures, the Spiders, and the QQQQ's. I last commented on these markets here.

I think these markets are about to make new lows for the reaction which stared last Thursday. I now believe the S&P's will find a low near 1447, the Spiders near 144.70 and the Q's near 44.70.

Once the reaction is complete I shall expect a move up to 1470 in the S&P's, to 147.00 in the Spiders, and to 46.40 in the Q's.

Guesstimates on February 26, 8:50 am ET

Spiders - March S&P Futures: The Spiders are headed for 147.00 and the S&P’s for 1470. Support today in the Spiders is at 145.10 and is at 1451 in the S&P’s.

QQQQ: I expect the Q’s to rally to 46.40 and then into the 47-48 range.

TLT - March Bonds: The lows made on January 26 will hold. TLT is now headed up into the 94-95 range. The bonds are headed for 120. Support in TLT is at 87.50 and in the bonds at 110-24. Next upside target for the bonds is 112-16.

March 10 Year Notes: I now believe the notes made their low on January 26 and are now headed for 111. Support is at 107-04. Next upside target is 108-08.

Euro-US Dollar: I now think it is unlikely that the euro rally as far as 132.30 and am pretty sure that the next down leg has started.

Dollar-Yen: Next upside target is 123.60. I expect to see the yen trade at 130 in 2007.

OIH - USO - April Crude: OIH should soon drop to to 129-130. USO should drop to 45. Resistance in April crude is at 62.50 and from there the market should drop to 55.00.

GLD - April Gold: I think that both GLD and April gold are very near important tops. An extended drop will start soon.

March Silver: Silver now has resistance at 1475. Its bear market will resume soon.

Google: Google is headed upward to 564.

S&P's, Spiders, and QQQQ's

Here are hourly charts of the March S&P futures, the Spiders, and the QQQQ's. I last commented on these markets here.

I think that a three phase reaction ended a short while ago in the Spiders and in the S&P's. If I am correct about this we should not see the S&P's close today below 1450 or the Spiders below 144.80.

I think the next swing upward will take the Spiders to 147.00, the S&P's to 1470 and the Q's to 46.40.

Domed House Update

Here is a daily chart showing the development of the Domed House portion of one of George Lindsay's Three Peaks and a Domed House formations. I last commented on this subject here.

As you can see the Dow has progressed upward roughly to the point at which point 21 was designated in my last post. However, I should emphasize that that was only and educated guess. So far I see no reason to regard the top in the Dow a couple of days ago as point 21. The drop from point 21 is typically the biggest reaction on the way up from point 10 and as you can see the drop over the past two days does not yet qualify.

My guess now is that point 21 still lies ahead. I think the Dow will climb to 13000 or a bit higher before point 21 becomes visible. If I am right about this then I think the late March estimate for point 23 will prove to be too early and it may well turn out that point 21 develops then instead of point 23. This would put point 23 off into late April or even as late as May 27.

Guesstimates on February 23, 8:50 am ET

Spiders - March S&P Futures: The Spiders are headed for 146.80 and the S&P’s for 1470. Support today in the Spiders is at 145.10 and is at 1452 in the S&P’s.

QQQQ: I expect the Q’s to rally to 46.40 and then into the 47-48 range.

TLT - March Bonds: The lows made on January 26 will hold. TLT is now headed up into the 94-95 range. The bonds are headed for 120. Support in TLT is at 87.50 and in the bonds at 110-24.

March 10 Year Notes: I now believe the notes made their low on January 26 and are now headed for 111. Support is at 107-04.

Euro-US Dollar: I now think it is unlikely that the euro rally as far as 132.30 and am pretty sure that the next down leg has started.

Dollar-Yen: Next upside target is 123.60. I expect to see the yen trade at 130 in 2007.

OIH - USO - April Crude: This swing should carry OIH to 129-130. USO should drop to 45. Resistance in April crude is at 62.50 and from there the market should drop to 55.00.

GLD - April Gold: I think that both GLD and April gold made important tops yesterday. An extended drop will start soon.

March Silver: Silver has reached the 1430 target and its bear market will resume soon.

Google: Google is headed upward to 564.

S&P's, Spiders, and QQQQ's

Here are hourly charts of the March S&P futures, the Spiders, and the QQQQ's. I last commented on these markets here.

I think the reaction which began from this morning's high points is either over or nearly so. The S&P's have dropped to within a point of 1452 support. The Spiders didn't get too close to support at 145.00 but I think a better estimate for their support now is 145.10. The Q's have support at 44.90 but this market is acting stronger than the S&P 500 and I suspect that support level will not be reached.

Next upside target is 1470 in the futures, 147.00 in the Spiders, and 46.40 in the Q's.

GLD and April Gold

Here are daily charts of the gold ETF and of April gold futures. I last commented on this market here.

I think the gold market has reached a decisive juncture. If fact, I believe that yesterday's wide range up day was climactic in nature and that an extended drop is about to start. Here is why.

First, I think gold traders are overwhelming short term bullish. Secondly, gold has reached the upper part of the 550-730 trading range of the past 9 months. Third, the move up from the low of this range reached new highs yesterday and has so far lasted 8 months. Fourth, the market has entered the resistance zones I have been watching for the past few weeks.

It is this context which makes me think that yesterday's very sharp rally indicates the imminent end of the upmove instead of the start of a breakout to new bull market highs for gold. I think we shall see GLD trade below 60 over the next couple of months and eventually move much lower than that. The corresponding level for the futures is 600.

Guesstimates on February 22, 8:50 am ET

Spiders - March S&P Futures: The Spiders are headed for 146.80 and the S&P’s for 1470. Support today in the Spiders is at 145.00 and is at 1452 in the S&P’s.

QQQQ: I expect the Q’s to rally first to 45.60 and then into the 47-48 range.

TLT - March Bonds: The lows made on January 26 will hold. TLT is now headed up into the 94-95 range. The bonds are headed for 120. Support in TLT is at 87.50 and in the bonds at 110-24.

March 10 Year Notes: I now believe the notes made their low on January 26 and are now headed for 111. Support is at 107-04.

Euro-US Dollar: I now think it is unlikely that the euro rally as far as 132.30 and am pretty sure that the next down leg has started.

Dollar-Yen: Next upside target is 123.60. I expect to see the yen trade at 130 in 2007.

OIH - USO - March Crude: This swing should carry OIH to 129-130. USO should drop to 45. Crude is about to drop to 54.00.

GLD - April Gold: I think that both GLD and April gold made important tops yesterday. An extended drop will start soon.

March Silver: Silver has reached the 1430 target and its bear market will resume soon.

Google: Google is headed upward to 564.

Guesstimates on February 21, 8:50 am ET

Spiders - March S&P Futures: The Spiders are headed for 146.80 and the S&P’s for 1470. Support today in the Spiders is at 145.00 and is at 1452 in the S&P’s.

QQQQ: I expect the Q’s to rally first to 45.60 and then into the 47-48 range.

TLT - March Bonds: The lows made on January 26 will hold. TLT is now headed up into the 94-95 range. The bonds are headed for 120. Support in TLT is at 87.50 and in the bonds at 110-24.

March 10 Year Notes: I now believe the notes made their low on January 26 and are now headed for 111. Support is at 107-04.

Euro-US Dollar: I now think it is unlikely that the euro rally as far as 132.30 and am pretty sure that the next down leg has started.

Dollar-Yen: I think the next up leg has started and that the yen will probably not make it down to 118.80. Next upside target is 123.60. I expect to see the yen trade at 130 in 2007.

OIH - USO - March Crude: This swing should carry OIH to 129-130. USO should drop to 45. Crude is about to drop to 54.00.

GLD - April Gold: Resistance in GLD is the 67-69 range. Resistance in gold is 675-690. I think an extended decline will start soon.

March Silver: I think silver will move a little higher to 1430. From there the bear market should resume.

Google: Google has dropped nearly to its last low at 454 but I think this reaction is over and that the next big move will be upward to 564.

S&P's, Spiders, and QQQQ's

Here are hourly charts of the March S&P futures, the Spiders, and the QQQQ's. I last commented on these markets here.

This morning's opening hour of trading saw a lot of aggressive selling but as you can see there has as yet been no follow-through selling. I am willing to bet that the buyers this morning were also predominantly longer time frame buyers. If I am right about this then the S&P's have begun a rally to 1470, the Spiders to 146.80, and the Q's to 45.60.

I still believe that over the next few months we shall see the S&P's trade over the 1500 level, the Spiders over 150 and the Q's near 48.

TLT and T-bonds

Here are daily charts of the Lehman Bros. 20 year bond index ETF and of the March T-bond futures. I last commented on these markets here.

As you can see both markets put in two consecutive daily closes above what I thought would be strong resistance. I believe this means that the late January lows will hold and that the trend turned up from there.

I am very bullish on the bond market, and especially on maturities 10 years and longer. I think TLT is headed for 94-95. I think the bond futures are headed for 120.

Guesstimates on February 20, 8:50 am ET

Spiders - March S&P Futures: The Spiders are headed for 146.80 and the S&P’s for 1470. Support today in the Spiders is at 144.70 and is at 1450 in the S&P’s.

QQQQ: I expect the Q’s to rally first to 45.60 and then into the 47-48 range.

TLT - March Bonds: This past Thursday and Friday the market closed above what I thought would be strong resistance so I conclude that the lows made on January 26 will hold. TLT is now headed up into the 94-95 range. The bonds are headed for 120. Support in TLT is at 87.50 and in the bonds at 110-24.

March 10 Year Notes: I now believe the notes made their low on January 26 and are now headed for 111. Support is at 107-04.

Euro-US Dollar: I now think it is unlikely that the euro rally as far as 132.30 and am pretty sure that the next down leg has started.

Dollar-Yen: I think the next up leg has started and that the yen will probably not make it down to 118.80. Next upside target is 123.60. I expect to see the yen trade at 130 in 2007.

OIH - USO - March Crude: Upside target for OIH at 140 was hit and this swing should carry the market to 129-130. USO hit the 50 level and now should drop to 45. Crude has reached 60.00 and is about to drop to 54.00.

GLD - April Gold: Resistance in GLD is the 67-69 range. Resistance in gold is 675-690. I think an extended decline will start soon.

March Silver: I think silver will move a little higher to 1430. From there the bear market should resume.

Google: Google has dropped nearly to its last low at 454 but I think this reaction is over and that the next big move will be upward to 564.

Guesstimates on February 16, 8:50 am ET

Spiders - March S&P Futures: The Spiders are headed for 146.80 and the S&P’s for 1470. Support today in the Spiders is at 144.70 and is at 1450 in the S&P’s.

QQQQ: I expect the Q’s to rally first to 45.60 and then into the 47-48 range.

TLT - March Bonds: TLT should drop to 86.00. The market has begun a trading range which should be followed a rally to 94-95. The bonds should drop to 108-28 while resistance today is at 111-22. I think a basing process has begun that will be followed by a move above the 115 level.

March 10 Year Notes: The notes will drop to 105-24 while resistance today is at 107-23. I think the market has begun a basing process. After it is complete I expect a move to above the 110 level.

Euro-US Dollar: The euro is stalling at 131.50 resistance but I think the market will rally a little more to 132.30 before resuming its decline.

Dollar-Yen: The yen should rally to 123.20. Support at 119.80 was broken yesterday but it looks like the market will end its reaction near 118.80/ I expect to see the yen trade at 130 in 2007.

OIH - USO - March Crude: Upside target for OIH at 140 was hit and this swing should carry the market to 131. USO hit the 50 level and now should drop to 46-47. Crude has reached 60.00 and is about to drop to 54.00.

GLD - April Gold: Resistance in GLD is the 67-69 range. Resistance in gold is 675-690. From those ranges I expect both markets to resume bear market declines.

March Silver: I think silver will move a little higher to 1430. From there the bear market should resume.

Google: Google has dropped nearly to its last low at 454 but I think this reaction is over and that the next big move will be upward to 564.

Guesstimates on February 15, 8:50 am ET

Spiders - March S&P Futures: The Spiders are headed for 146.80 and the S&P’s for 1470. Support today in the Spiders is at 144.90 and is at 1452 in the S&P’s.

QQQQ: I expect the Q’s to rally first to 45.60 and then into the 47-48 range.

TLT - March Bonds: TLT should drop to 86.00. The market has begun a trading range which should be followed a rally to 94-95. The bonds should drop to 108-28 while resistance today is at 111-12. I think a basing process has begun that will be followed by a move above the 115 level.

March 10 Year Notes: The notes will drop to 105-24 while resistance today is at 107-16. I think the market has begun a basing process. After it is complete I expect a move to above the 110 level.

Euro-US Dollar: The euro is stalling at 131.50 resistance but I think the market will rally a little more to 132.30 before resuming its decline.

Dollar-Yen: The yen should rally to 123.20. Support remains at 119.80. I expect to see the yen trade at 130 in 2007.

OIH - USO - March Crude: Upside target for OIH at 140 was hit and this swing should carry the market to 131. USO hit the 50 level and now should drop to 47. Crude has reached 60.00 and is about to drop to 54.00.

GLD - April Gold: Resistance in GLD is the 67-69 range. Resistance in gold is 675-690. From those ranges I expect both markets to resume bear market declines.

March Silver: I think silver will move a little higher to 1430. From there the bear market should resume.

Google: Google has dropped nearly to its last low at 454 but I think this reaction is over and that the next big move will be upward to 564.

S&P's, Spiders, and QQQQ's

Here are hourly charts of the March S&P futures, the Spiders, and the QQQQ's. I last commented on these markets here.

You can see that all three markets have broken above resistance on wide range up bars after Bernanke's testimony this morning. This means that the reaction which began last week is over and that the S&P's are headed up to 1470, the Spiders to 146.80 and the Q's to 45.60.

The low of this morning's opening hour is now support and I think all three markets will stay visibly above that level for the rest of the day.

Guesstimates on February 14, 8:50 am ET

Spiders - March S&P Futures: The Spiders and the S&P’s both closed above what I thought would be resistance yesterday. Any wide range up bar that puts the market visibly above yesterday’s close will lead me to a bullish stance. Failing this, I shall be expecting a drop in the Spiders to 142.30, and in the S&P’s to 1428.

QQQQ: I expect the Q’s to hold support near 43.20 and then resume their rally into the 47-48 range.

TLT - March Bonds: TLT should drop to 86.00. The market has begun a trading range which should be followed a rally to 94-95. The bonds should drop to 108-28 while resistance today is at 110-24. I think a basing process has begun that will be followed by a move above the 115 level.

March 10 Year Notes: The notes will drop to 105-24 while resistance today is at 107-04. I think the market has begun a basing process. After it is complete I expect a move to above the 110 level.

Euro-US Dollar: The euro broke above 130.50 resistance this morning and will continue upward to 131.50. From there the drop to support near 126.90 should resume.

Dollar-Yen: The yen should rally to 123.20. Support remains at 119.80. I expect to see the yen trade at 130 in 2007.

OIH - USO - March Crude: Upside target for OIH at 140 was hit and this swing should carry the market to 131. USO hit the 50 level and now should drop to 45. Crude has reached 60.00 and is about to drop to 54.00.

GLD - April Gold: GLD is headed for the 67-69 range before the bear market resumes. I expect April gold to rally to 675-690 and then resume its bear market.

March Silver: I think silver will move higher to 1430. From there the bear market should resume.

Google: Google has dropped nearly to its last low at 454 but I think this reaction is over and that the next big move will be upward to 564.

S&P's, Spiders, and QQQQ's

Here are hourly charts of the March S&P's, Spiders, and QQQQ's. I last commented on these markets here.

I think the market completed the first phase of a three phase reaction at yesterday's low points. I think the subsequent second phase rally will stall with the S&P's near 1446, the Spiders near 144.30, and the Q's near 44.10.

Since the intial drop carried close to my original downside targets I think it likely that all three markets will drop a bit further than I originally projected. Now I expect to see the S&P's near 1428, the Spiders near 142.30, and the Q's near 43.20 before the next up move begins.

Guesstimates on February 13, 8:50 am ET

Spiders - March S&P Futures: I think the Spiders are headed down to 142.70 and the S&P’s down to 1432. From those levels I shall look for a rally to new bull market highs. Meantime resistance in the Spiders is at 144.10 and in the S&P’s resistance is at 1446.

QQQQ: I expect the Q’s to hold support near 43.60 and then resume their rally into the 47-48 range.

TLT - March Bonds: TLT should drop to 86.00. The market has begun a trading range which should be followed a rally to 94-95. The bonds should drop to 108-28. I think a basing process has begun that will be followed by a move above the 115 level.

March 10 Year Notes: The notes will drop to 105-24. I think the market has begun a basing process. After it is complete I expect a move to above the 110 level.

Euro-US Dollar: The euro should hold resistance at 130.50 and has begun a drop to support near 126.90.

Dollar-Yen: The yen should rally to 123.20. Support remains at 119.80. I expect to see the yen trade at 130 in 2007.

OIH - USO - March Crude: Upside target for OIH at 140 was hit and the next swing should carry the market to 131. USO hit the 50 level and now should drop to 45. Crude has reached 60.00 and is about to drop to 54.00.

GLD - April Gold: GLD is headed for the 67-69 range before the bear market resumes. I expect April gold to rally to 675-690 and then resume its bear market.

March Silver: I think silver will move higher to 1430. From there the bear market should resume.

Google: Google has dropped nearly to its last low at 454 but I think this reaction is over and that the next big move will be upward to 564.

Guesstimates on February 12, 8:50 am ET

Spiders - March S&P Futures: I think the Spiders are headed down to 142.70 and the S&P’s down to 1432. From those levels I shall look for a rally to new bull market highs. Meantime resistance in the Spiders is at 144.10 and in the S&P’s resistance is at 1446.

QQQQ: I expect the Q’s to hold support near 43.60 and then resume their rally into the 47-48 range.

TLT - March Bonds: TLT should drop to 86.00. The market has begun a trading range which should be followed a rally to 94-95. The bonds should drop to 108-28. I think a basing process has begun that will be followed by a move above the 115 level.

March 10 Year Notes: The notes will drop to 105-24. I think the market has begun a basing process. After it is complete I expect a move to above the 110 level.

Euro-US Dollar: The euro rally should hold resistance at 130.50 and has begun a drop to support near 126.90.

Dollar-Yen: The yen should rally to 123.20. Support remains at 119.80. I expect to see the yen trade at 130 in 2007.

OIH - USO - March Crude: Upside target for OIH at 140 was hit and the next swing should carry the market to 131. USO hit the 50 level and now should drop to 45. Crude has reached 60.00 and is about to drop to 54.00.

GLD - April Gold: GLD is headed for the 67-69 range before the bear market resumes. I expect April gold to rally to 675-690 and then resume its bear market.

March Silver: I think silver will move higher to 1430. From there the bear market should resume.

Google: Google has dropped more than I expected but is approaching the low of its 454-513 trading range. I think this reaction will halt above 454, probably in the 458-460 zone. Then the a move up to 564 should begin.

S&P's, Spiders, and QQQQ's

Here are hourly charts of the March S&P futures, the Spiders and the QQQQ's. I last commented on these markets here.

Contrary to my expectation the market broke badly this afternoon. You can see that the Spiders and S&P's as well as the Q's broke the support I had been watching. Moreover, this break was accompanied by wide range, down bars (and high volume). This indicates aggressive selling by long time frame traders. This action is especially significant because in the S&P's and Spiders it represents a breakout from a narrow, well defined trading range which had developed previously this week.

The minimum downside expectation now is illustrated on the charts. Since I am still bullish I expect the market to continue putting in higher lows and higher highs. The last break in the S&P's was about 25 points and a break of the same size now would end around 1432 (142.80 in the Spiders). I think the 43.60 level will hold in the Q's because they are acting better than the S&P and I expect this overperformance to continue.

If the market proves weaker than I think then the next downside target would be determined by a 33 point break from 1458 in the S&P's, a break equal in length to the December-January drop. This would drop the futures to 1425 or so and the Spiders to 1420.10.

I believe this is a normal reaction in a continuing uptrend and expect new bull market highs in a couple of weeks.

Guesstimates on February 9, 8:50 am ET

Spiders - March S&P Futures: I think the Spiders have started a move to the next resistance which stands near 146.00. Support is at 144.40. The futures should rally to 1465-67 before stalling once more. Support is at 1449.

QQQQ: The Q’s should rally up to 47-48.

TLT - March Bonds: TLT should drop to 86.00. The market has begun a trading range which should be followed a rally to 94-95. The bonds should drop to 108-28. I think a basing process has begun that will be followed by a move above the 115 level.

March 10 Year Notes: The notes will drop to 105-24. I think the market has begun a basing process. After it is complete I expect a move to above the 110 level.

Euro-US Dollar: The euro rally should hold resistance at 130.50 and then begin a drop to support near 126.90.

Dollar-Yen: The yen should hold support near 119.80 and then rally to 123.20. I expect to see the yen trade at 130 in 2007.

OIH - USO - March Crude: Upside target for OIH at 140 was hit and the next swing should carry the market to 131. USO hit the 50 level and now should drop to 45. Crude has reached 60.00 and is about to drop to 54.00.

GLD - April Gold: GLD is headed for the 67-69 range before the bear market resumes. I expect April gold to rally to 675-690 and then resume its bear market.

March Silver: I think silver will move higher to 1430. From there the bear market should resume.

Google: A move up to 564 is underway. I expect the market to halt its reaction in the 465-68 range and then resume its up move.

S&P's, Spiders, and QQQQ's

Here are hourly charts of the March S&P futures, the Spiders, and the QQQQ's. I last commented on these markets here.

In this morning's guesstimate I said that I expected the S&P's to hold support at 1449 and the Spiders to hold support at 144.40. So far both markets have held support and I think that both will move to the indicated upside targets after some more sideways action.

The Q's are starting to act stronger than the S&P's and Spiders. I expect this situation to continue and think the Q's will hold support at the low of yesterday's breakout bar.

Guesstimates on February 8, 8:50 am ET

Spiders - March S&P Futures: I now think the Spiders are about to move to the next resistance which stands near 146.00. Support is at 144.40. The futures should rally to 1465-67 before stalling once more. Support is at 1449.

QQQQ: The Q’s should rally up to 47-48.

TLT - March Bonds: TLT should drop to 86.00. The market has begun a trading range which should be followed a rally to 94-95. The bonds should stall at resistance in the 111-00 to 111-04 zone and then drop to 108-28. I think a basing process has begun that will be followed by a move above the 115 level.

March 10 Year Notes: The notes will stall at 107-08 resistance and then drop to 105-24. I think the market has begun a basing process. After it is complete I expect a move to above the 110 level.

Euro-US Dollar: The euro rally should hold resistance at 130.50 and then begin a drop to support near 126.90.

Dollar-Yen: The yen should hold support near 119.80 and then rally to 123.20. I expect to see the yen trade at 130 in 2007.

OIH - USO - March Crude: Upside target for OIH at 140 was hit and the next swing should carry the market to 131. USO has stopped a tad shy of the 50 level and now should drop to 45. Crude has reached 60.00 and is about to drop to 54.00.

GLD - April Gold: GLD is headed for the 67-69 range before the bear market resumes. I expect April gold to rally to 675-690 and then resume its bear market.

March Silver: I think silver will move higher to 1430. From there the bear market should resume.

Google: A move up to 564 is underway. I expect the market to halt its reaction in the 465-68 range and then resume its up move.

S&P's, Spiders, and QQQQ's

Here are hourly charts of the March S&P futures, the Spiders, and the QQQQ's. I last commented on these markets here.

After an early reaction all three market broke out above their recent highs, the S&P's and Spiders reaching new bull market highs. But the breakout was an unenthusiastic one and the market got very narrow at its highs. This afternoon we saw a break which carried all three markets back to the low of this morning's wide range breakout bar.

I think the low of this breakout bar will prove to be support, especially since at that level the S&P's and Spiders have dropped as much as they did during the reaction yesterday.

I expect the advance to resume in all these markets tomorrow.

Google

Here are daily bar and 15 minute bar charts of Google. I last commented on GOOG here.

The market reacted more than I had expected but so far is holding support which I later estimated to be in the 465-68 range. The exact level which corresponds to a previous high is 468.58. (See my discussion of chart based support and resistance here. )

The market has traded sideways for a little more than a day now and I think a base which will support a substantial rally is visible. Even if the upcoming rally only matches the length of the last rally it would carry GOOG up to 494. But I expect this market to rally much more than that over the next couple of months. My upside target is still 564 and I suspect even this will prove to be too low.

Bonds and TLT

Here are daily charts of the March T-bond futures and the Shearson 20 year bond index ETF. I last commented on these markets here.

I think the rally from the recent low points is about over. Both the bonds and the TLT should soon begin a drop that will carry to new lows for the decline from the December top. But I also think that these markets are about to establish important low points. The next big move should be upward from these upcoming lows. I expect to see the TLT trade at 95 and the bonds at 120 later this year.

Guesstimates on February 7, 8:50 am ET

Spiders - March S&P Futures: I now think the Spiders are about to move decisively above the 145.00 level to the next resistance which stands near 146.00. The futures should rally to 1465-67 before stalling once more.

QQQQ: The Q’s should rally up to 47-48.

TLT - March Bonds: TLT should find support near 86.50. I expect the market to start a trading range in this vicinity which should be followed a rally to 94-95. The bonds should stall at resistance in the 111-00 to 111-04 zone and then drop to 108-28. I think a basing process has begun that will be followed by a move above the 115 level.

March 10 Year Notes: The notes will stall at 107-08 resistance and then drop to 105-24. I think the market has begun a basing process. After it is complete I expect a move to above the 110 level.

Euro-US Dollar: The euro rally should hold resistance at 130.50 and then begin a drop to support near 126.90.

Dollar-Yen: The yen should hold support near 119.80 and then rally to 123.20. I expect to see the yen trade at 130 in 2007.

OIH - USO - March Crude: Upside target for OIH at 140 has nearly been and the next swing should carry the market to 131. USO has stopped a tad shy of the 50 level and now should drop to 45. Crude has reached 60.00 and is about to drop to 54.00.

GLD - April Gold: GLD is headed for the 67-69 range before the bear market resumes. Switching to the April contract in gold. I expect April gold to rally to 675-690 and then resume its bear market.

March Silver: I think silver will move higher to 1430. From there the bear market should resume.

Google: A move up to 564 is underway. I expect the market to halt its reaction in the 465-68 range and then resume its up move.

S&P's, Spiders, and QQQQ's

Here are hourly charts of the March S&P futures, the Spiders, and the QQQQ's. I last commented on these markets here.

We have traded in a very narrow range the past four days. I now think that these markets are about to breakout from this range on the upside. Here's why.

Note the wide range down bar put in this morning. Normally such a bar would preceed a downside breakout. But there was no follow through selling. This tells me that the buyers on that break were longer time frame traders. Then, each of these markets has subsequently rallied to the high of that down bar which is normally resistance. In fact, the Q's have actually moved above that resistance level. Moreover, the current bar is a wider range up bar. This leads me to expect that the resistance level will soon be taken out and if it is the upside breakout will follow.