Sunny Side of the Street Daily

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VantagePoint Prediction for Tomorrow

VP

Author's Note: I disagree with the VP Prediction for tomorrow. I believe that the bottom is temporarily in. I think the downdraft will stop at the 68% level for the meantime.

On the News Front

According to an article in MSNBC.com, the S&P credit rating of the US has been dropped. "U.S. Treasury securities, once undisputedly the safest investment in the world, are now rated lower than bonds issued by countries such as the United Kingdom, Germany, France or Canada." That's not good news! In fact, in my book, it's terrible news. This fact alone is enough to throw the US into further recession. I have been saying for the last 3 years that we are in a depression, not a recession, and I still think it's true.

Dow Jones

The chart shown just below is of the weekly Dow Jones Industrial Index. You can readily see how the Dow dropped (although precipitously) just to the Fibonacci 23% area. Not really a depressive drop, as many are saying, but rather a normal correction to the highest Fibonacci line. Not a problem, unless the drop continues. You can also see the Attractors back at the 2008 timeframe, where it dropped previously. Both of these lines "should" hold steady and the market "should" rise from here. We'll see when it all opens back up on Monday.

INDU_W

On the daily chart, below, the drop looks much more ominous. Still, it's just to the weekly 23.6% line and again, pretty much just to the Attractor at the left hand side of this chart. You can see, even though I haven't marked it, the confluence of prices. Yes, the pundits say it's all about S&P downgrading the US debt / credit rating, but you can see on this chart that price dropped to an evident technical level. Just business as usual.

INDU_D

On the monthly chart, below, it doesn't look so bad. Yes, it was a harsh day, but the long-term chart isn't really as bad as all that. Ignore mass hysteria. BUT, be very, very wary of your trading during this period. Keep the long-term charts in mind when you trade shorter timeframes.

INDU_M

S&P EMini

ES

No one expected such a sharp and quick retracement, but there it is, the orange Attractor shows just exactly where we were going. Now that it has happened, I expect lots of backing and forthing for a few days as the market re-adjusts to its new level. Be very careful as markets are likely to be volatile.

FOREX

GBPUSD

The Dollar Pound currency pair was riding the bottom SunnyBand downward for a while, then it quickly bounced up to the Attractor at 1.66432, near the top SunnyBand. A few months near the top, and then a quick drop back down to the bottom SunnyBand. Now it's forming a pennant of congestion, and is back near the Attractor again near the top. This has been a long sideways channel, and is a very volatile market to trade. If you are interested in Forex, be careful. It's a few dollars at a time kind of market.

STOCK PICKS (High PHWs)

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PHW

Best