Bounce, Test, Bounce, Crash

Thursday, May 18, 2006 | 07:32 AM

The technical damage done this week was substantial, but as I mentioned last night on Kudlow, we are near support.

I'll expand upon this later, but I can envision a bounce off of these lows, a reflex rally that runs on decreasing breadth and volume for a few days to a week or so, then a retest -- and failure -- to new lows in June.

That gets us oversold enough for a stronger bounce for a month or so (July? August?) and then the denouement into September and October.

This is just a guess, and I'll try to get more details and intelligent projections later this week, but that's my expectations.

Your mileage may vary  . . .

Thursday, May 18, 2006 | 07:32 AM | Permalink | Comments (14) | TrackBack (0) add to | digg digg this! | technorati add to technorati | email email this post



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I suspect that the NASDAQ (and NDX) will rally up to resistance and fail badly. I will remain short the QQQQs and SPY. Yesterday, I sold most of my OEX June puts near the close and will look to buy September SPX and NDX puts into any rally.

Posted by: Larry Nusbaum, Scottsdale | May 18, 2006 7:56:54 AM

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