Bailout Fails in The House, S&P Hammered

I hate having to write forecasts like this, because the last thing anybody needs is more gloom. However, market levels are reaching critical areas of support with massive momentum in the downward direction.

On September 17th, in my S&P 500 Forecast I said the market direction is down. We came a few points away from taking ou the 61.8% retracement level from  long term Rally starting in March 2003 at 1091. Far more distrubing than this is watching the 50 week moving average race towards the 200 week moving average, and all technical indicators showing the bear is still gaining strength.

I also showed a chart (below) that looks ominously like a double top. If the chart below pans out, there’s no support until $772. If that level breaks, the S&P 500 could be (doubtful, but hey, I didn’t make the chart) totally wiped out.

Forecast Going Foward

I think it should be fairly obvious by now that the economy is in for a long, rough road. I’d be getting short here, and putting in protective puts on anything you go long. If you absolutely must go long, utilities and defense companies are going to be the most likely to hold up.

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