The Weekly Report for February 11th - February 15th, 2008

February 10, 2008- Market Summary

The bullish attempt to recover from January's losses was interrupted last week because of a heightened concern about the economy. Price action was predominantly mixed and volume was lighter than average as the rally succumbed to traders' willingness to lighten their positions in case of an upcoming recession. In our last report, we mentioned that the majority of the indexes are testing the resistance of their respective November lows. We noted that this was technically significant because bearish traders would likely look at entering positions near the horizontal trendline because it offers an interesting risk/reward ratio. The predicted bounce off the resistance levels is technically significant because it illustrates that the bears are still in control of the momentum. We expect that the selling pressure will continue and that high levels of volatility will remain for the rest of the quarter.

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