On Friday NQ opening with a gap-down below key support, as expected, ignited a powerful trending down move that lasted most of the day, with a close not far from the low of the day as a consequence of the end of day and end of week profit-taking.
With Greece on the verge of declaring bankruptcy and Moody's imminent downgrade of several French banks, credit contraction will accelerate, thus putting downward pressure on equities all across the globe. The Fed and European central banks are sure to intervene to prevent market free-fall. Whether they are going to be successful against the backdrop of accelerating credit collapse only time will tell.
But whatever it may be, for Monday I will use 2160 as key LIS (Line-in-the-Sand) .
- Bullish above LIS targeting a rally up to 2200-2210. A sustained break above 2210 implies a further rally up ti 2140.
- Below LIS I will be looking for the market to decline down to 2100. A sustained break below 2100 implies a further decline down to 2040.
