Market Comment 12/25/06

This is last night's market comment...
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TradeStalker's

R.B.I. Trader's Update

12/ 25 / 2006

(Published Since 1996)
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Dateline: 5:10 pm Eastern time, 12/25/2006

The market couldn't clear initial resistance, or establish
any uptrend, on Friday. That meant selling bounces was the
play, and the market was in bad shape for the 5th out of the
last 6 trading days. There was a bounce off of the last
support zones early in the day but, per usual of recent
action, the bounce was sold as soon as the move fizzled and
the market sold off to close at the lows for the day.

With the market getting very close to what should be a
critical juncture, I thought I'd sneak away and take time to
point a few things out for Tuesday's trading session.

IF the market hasn't been hurt too much by the recent
action, then we should be close to a short term low. The
trendline off the summer low on the SP500 daily chart is
just below. Along with that trendline, the drop thus far is
very close to being equal to the prior three drops. From
08-04 to 08-10 the SP futures fell 32.50 points before
reversing and beginning a new uptrend. From 10-26 to 11-03
the SP futures fell 30.75 points, and then resumed the
uptrend. The last drop from 11-22 to 11-28 was 32.50 points
on the SP futures, and then the market started a new
uptrend.

An equivalent drop would take the SP futures to the
1413.50-1411.75 zone. There also is the .618 retracement
from the 11-28 swing low to the 12-15 top down in that area
(1411.00), so price-wise that zone looks very important.
Along with the SP500 coming to a key cluster of support, the
VIX has moved almost 10% over its 10 day average close.
That's a short term extreme, and we could get buy signals if
it turns down. In addition to that, the RBI Buy gate is open.

So, in a nutshell.... it looks like the SP futures will
need to find buyers on a test of the 1413.50-1411.75 zone.
If the market sells off that far, it should come roaring
back. If it gets there, and can *not* get bid up, then we
could see a panic selloff set in.

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Good Trading,
Mike Reed