Market outlook for week of March 23rd (UPDATE Monday rally))

Well Friday had me scrambling as Options expiration occurred Friday on what was called Quadruple Witching Day. I was hoping for a rise up on Friday but it wasn't to be had. We did finish 2 full weeks up on the Dow, S&P 50 and Nasdaq but as you can see from the chart above I believe now we will have a better than 50% chance of pulling back and retesting the lows. I would like to be wrong here as we would all make more money. But this rally stalled in my mind and the news of the AIG bonuses added a negative tone to the news. President Obama is trying to reassert his focus on his agenda but the AIG sidetracked it and it is going to be difficult to reagin positive momentum as many are finding bonus issues with J.P. Morgan and other Banks as well and this will keep the story front and center for a while.

The Dow ended the week at 7,278, the S&P 500 at 768 and both indexes could not get over and stay above their 40 day Moving average. They got above it on Wednesday but pulled back. The Nasdaq closed at 1,457 and closed just above its 40 day Moving Average but just barely and I expect it to pullback below it as well. We must go above the red downtrend line to start this move up and we made an unsuccessful attempt at that, on Friday.

This is why I am seeing the possibility of a retest. This last leg up from the lows may be setting up a double bottom or a "W" pattern and if that is true we have about a month or two before we move up from this range of 6,440 to 7,600. This is why I ventured in to buy the ETF Ultra Short, TZA, again and take some profits. I don't know what is going to really happen and neither does anyone else for that matter. It's all an educated guess based upon a host of facts one puts together to tell a story, first to oneself, and then to others. I try to get a better record than just a 50/50 flip of a coin. You be the judge as to how I'm doing. It's all here for you to see and comment on if you so choose. I'm just happy you took the time to come here and read this. So thanks and hope you are not disappointed.

UPDATE: 4:45am PST March 23rd.

Today Futures are up significantly on the expectation of Treasury Secretary Tim Geithner's plan for toxic assets the banks have. The Dow is up over 200 in premartket and European stocks are all up. But remember this, much is riding on this plan and the market could be down 300-400 today, if the plan is not accepted by Wall Street. Watch to see if we have a significant breakout above the Red downtrend line today. It could be a barn burner in either direction.

To break the downtrend line we would have to cross above 8,000 on the Dow and over 805 on the S&P 500.

UPDATE 9:00AM PST

The market has rallied on the Geithner plan and the Dow is up 308 points to 7.595 while the S&P500 gas crossed over 800 to 802. So far so good.