The Weekly Report for October 27th - October 31st, 2008

October 26, 2008- Market Summary
In our previous reports, we've discussed the underlying economic issues that have been wreaking havoc on stock markets around the world. Unfortunately for investors, the concerns of a global recession seem to be growing. Friday's price action sent the readings on the CBOE Volatility Index to record highs, indicating that sheer panic has taken control of the movement in the stock market. As we noted last week, the historically high VIX levels may be used as a contrarian indicator to suggest that things will start to settle down. However, stories of record-high closes on the VIX have been commonplace over the past couple weeks, so it may be best to wait on the sidelines until things straighten out.

Taking a look at the charts below, you'll see that the major indexes are trading at their lowest levels since April 2003. The indexes have sliced through support levels and the levels of volatility that have been present in recent sessions have created extremely wide trading ranges. As mentioned above, the volatility is making it extremely difficult to determine when the selling pressure will end, so traders should consider waiting until there is a clearer signal that a bottom is forming.

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