EQUITY MARKET COMMENT 2/6/2008

The market continued its decline in the last third of the day, however, the fact that higher prices were possible in the early part of the day offers some constructive behavior for the potential hammering out a short term low.

The chart below represents the momentum of the market and is at a key juncture for the intermediate term.

In order for this model to remain constructive towards the intermediate term we should see it stabalize or even turn up tomorrow. It is going to give us a fairly big heads up as to what should come next.

Yet another momentum model that continues to show strength in the face of sharply lower prices. This model currently confirms the 1270 low on the S&P as a major intermediate term low.

We continue to have about 8 more S&P 500 points of downside risk to play with before we would expect the market to turn up.

As I talked about before. It is very important that the 1318 level on the SPX remain in tact and at the very least, if it does break, it should not close below that level. A close below that level would have the possability of ushering in a decline below the 1270 level and down towards the 1225-1233 level. Needless to say, this event would not be constructive.

We still have yet to get any indications that take us out of the buy weakness mode we currently are engaged in, however, we are close to the 1318 level and that needs to be watched with care.

Another bullish current event is the slow down in volume we have seen during the last 3 days as the market has moved lower. This could be a pre-cursor to a corrective pattern finishing the last of its move lower.

Tomorrow could be paramount to the short, intermediate and long term health of this market, so stay tuned.