“Never make predictions, especially about the future.” Casey Stengel

The stock market is dangerously close to falling off a cliff…or finding support for the next cliff to be conquered.  The November low has been labeled “the low” by so many on the Street that its breach could signal a huge move down-expectations dashed can lead to fear and panic, thus more selling.  Could DOW 6000 be near?  That would take us just below the lows hit in April 1997.   Of course, there are those who are calling for a major rally as well, specifically Charles Nenner, who is calling for the S&P 500 to reach 900/DOW 9000 by the middle of March.

This week could well be the week to be remembered for either the beginning of a rally off a tested low or a break down to multi-year lows.

THE CROSSHAIRS TRADER looks at charts and catalysts for stock movement and right now the charts are bearish and bullish catalysts are hard to find.

THE CHARTS:

The S&P 500 has been in a range of 800 to 875 since January 20, the DOW 7800 to 8400, and the NASDAQ 1440 to 1590 (the best performer of the three).  Right now we are near the lows again for the S&P 500 and the DOW, and the NASDAQ will have to play catch up.  The trend for the indices is down.  THE CROSSHAIRS TRADER’S INDICATORS are giving bearish signals and according to these signals a 1200 point move on the DOW to around 6500 could be in our future. On the other hand, bullish indications will take some work.

CATALYST:

The move by our government-call it what you will-to pump more money into our troubled economy, has been voted on and has passed, Tim Geithner cannot seem to settle the Market nervousness, earnings season is pretty much over with little in the way of good news, the FED can’t lower rates anymore and the BAD BANK idea has been tabled for the time being.  Where is a catalyst?

So, here we are either on the edge of a trading range about to fall off or at a point where a new rally will begin. THE CROSSHAIRS TRADER knows that charts are historical, not predictive and that a catalyst can arise unexpectedly, so there is no prediction either way.  What the best traders wait for is confirmation of the next move.  Will the break below the lows confirm the next move down or will support at the lows confirm the next move up?

THE CROSSHAIRS TRADER should enter the battlefield accordingly.

TRADING IS WAR.  PREPARE YOUR WEAPONS.