If Oil Remains Above $50 In The Afternoon, This Is What I See

In
our prediction posted Friday morning, we said the cash Dow would bounce Friday
then fall on Monday.
Further, we said the Dow would likely “test and likely
break weak support at 10,000.”  That
occurred Monday as the cash Dow started the day by testing the 10,000 level,
then made an attempt to firm around the lunch hour and then tested 10,000 again.
And in fact, later in the afternoon the cash Dow took another tumble into
the close to end the day at 9988, down some 58 points on the day. 

You will recall that
yesterday we said the NASDAQ would likely move lower towards the 50-day moving
average.  That occurred, as the NAS
was one of the relative worst performers of the day. 
As you can see on the exact prediction chart posted yesterday with the
addition of Monday’s price action, the RSI broke 50 and the MACD clearly
rolled over. 

Prediction for
Tuesday:  On the one hand,
the markets are starting to look oversold on a daily basis and we could see an
attempt to bounce.  On the S+P
we’re getting close to our target and the support we previously identified,
which could motivate buyers to get some courage. 
On the other hand, as mentioned we haven’t touched our support target
of 1100 on the cash S+P as well as the 50-day moving average on the NASDAQ and
9925 on the Dow.  I ultimately
expect us to test these levels.  One key is going to be to watch the oil
market.  If oil remains over $50 in the afternoon, we could see a sell-off
in stocks.