Downside resistance levels being hit before the Obama rally

Volume is drying up on market declines and each time it grows the market has recently gone up. All the the large equities markets are indicating that they have bottomed. Prices can now go up enormously on just a small increase in volume such that the Obama rally will likely catapult the markets higher without much time for investors to adjust. In a little more than a week we anticipate that more than half of our expected 40% rally from the December lows will be over. That 40% rally is what is needed to only reach the lower limit of a normal bear market. The market has much higher potential.

The adverse effects of the current recession are exaggerated by a press that thinks they can build up the new president by tearing down the old one. Yes, today the 2.6 million unemployed Americans exceeds even the unemployment when Rome fell to the barbarians but then it was 100% Roman unemployment and in America it is only 7.3% unemployment where 6% is still considered normal. The exaggeration of the negative only has another week to run before the media begins exaggerating the positive for the new administration.

Asian and European markets are down again on a weighted basis of about 2.2% for both. Japan however is down 4.8% after Sony lost over $1Billion.

The best entry points now are likely the last hour of the day and put the limit orders in at least 1% below the price going into the last hour.

Mad money is beginning to recognize stock bottoms. If Jim Cramer opens his eyes he will see that the major markets look just like the bottoming stocks. The death of American Capitalism has been grossly exaggerated and has served well the 2008 campaign objective of unseating the Republicans. It is unlikely that the new Democrat president will be a socialist so the fears that lead to the 20% decline after the election will likely prove unfounded.