Equities market analysts offer thoughts whether bounce comes soon, or needs deeper correction first

Now that the turn settled on the 1/18-ish time frame and broke under 1130 without getting over 1150 - analysts are studying whether the market is oversold enough already for a decent swing trade bounce. It's possible. Alternatively it would have to break lower to test around 1050. But let's see what some of the most talented analysts are saying. We'll start with Terry Laundry's update today, 1/23 at T Theory Foundation: T Theory Calculations, Daily Updates, Charts and Data, http://www.ttheoryfoundation.org/t-theory-calculations.html.

.

Here's quoting it - clicking the chart should also get you there to his big version of it:

Chart and Data Below (Click on Image for bigger chart)

Saturday Morning 8AM Jan 23 2010 Comment for Friday Jan 22 Close: Forecast remains bullish but the correction is becoming climatic and it would be expected to stabilize early next week around mid channel (1105) or if that fails then lower green envelope (1045). Will have to wait for more data.

The market is sufficiently oversold via the Arms ratio but one more selling climax can't be ruled out. The Volume oscillator has fallen to levels associated with major lows however at these deep levels is its very likely that a fews days of stabilized will be needed before any turn around, so we can wait a few more days.

If the market is to stabilize at mid-channel it will have to rally early next week since it is already under 1105. A small penetration is not unusual on a steep selling wave, but if it is to stabilize, it rallies quickly to bring the S&P above the mid channel level, then quietly forms a base around the mid channel level using the oversold condition as support. That what we should watch for early next week.

Terry

Now let's turn to Mike Burk, who expected the market to drop in his report last week. He is more optimistic this week. I wouldn't say it's a lock that the market bounces without seeking lower - but it can happen. And Mike Burk looks at the possibilities and technical situation, as usual, in his Technical Market Report, 1/23, at Safe Haven | http://www.safehaven.com/article-15588.htm.. Here's what he says at the outset, but do click the link to read his full analysis!

The good news is:
• The market is oversold, offering the 1st buying opportunity since last October.

Next, check this out - Todd Salamone and Rocky White discuss the possibilities of the SPX regaining and exceeding its 80-day MA (now at 1096) to go back up to 1150, or fail down to 1050, in Monday Morning Outlook: Dow Jones Industrial Average Suffers Worst Week Since February 2009, 1/23 at http://www.schaeffersresearch.com/commentary/content/monday+morning+outlook+dow+jones+industrial+average+suffers+worst+week+since+february+2009/observations.aspx?ID=97550#97550

That was not fun. The Dow Jones Industrial Average suffered its worst week in nearly a year, effectively wiping out 2010's gains. Earning reports failed to provide much lift, the Chinese are threatening to tighten lending policies, jobless and housing figures disappointed, and the banking sector is worried about President Obama's financial reforms. Looking ahead to next week, Todd Salamone, Schaeffer's Senior Vice President of Research, says that the current pullback mirrors similar action from the October 2009 earnings season. Next, Senior Quantitative Analyst Rocky White notes that Friday's big decline was the fifth day in a row that the Dow moved at least 100 points. He takes a look at what happens when the Dow moves up or down in a big way two days in a row. Finally, we wrap up with a look at some key economic and earnings reports slated for release this week.

This article at Schaeffer's also includes this link to where you can download their Sentiment Magazine, at http://www.schaeffersresearch.com/sentiment/?CODE=SIR10AMMOMAGP

I frankly haven't had time to get familiar with it, but recommend that readers who do have the time, check it out. Here's what the webpage is saying:

Welcome to the fourth issue ofSENTIMENT, smart options for today's investor, a quarterly magazine devoted to options trading. We're excited to offer you another issue of insightful, timely articles that should help make your trading more profitable and more enjoyable. Issue No. 4 includes features on the option trading opportunities you will find during expiration week, and the much talked about CBOE Market Volatility Index, or VIX, along with the final part of our series on Expectational Analysis ®, our three-tiered methodology for analyzing the market. The quarterly Sentiment Report offers up some thoughts on where the market is headed in 2010, including our target for the S&P 500 Index. See below for more details on the stories in this issue. Along with SENTIMENT magazine, Schaeffer's Investment Research Inc. offers a full array of print and multi-media educational offerings to the options trading community, including the Option Advisor newsletter and our award-winning Web site, SchaeffersResearch.com. We've been delighted by the reader response to our magazine; please enjoy it. And if you like what you see in our latest issue, don't forget to check out our archived issues below.

Philip Davis of Phil's Stock World has some "buy the dip" comments on GS, BAC and C, along with his interesting-as-always commentary, in Friday Forecast: Stop the Week, We Want to Get Off -- Seeking Alpha, 1/23 at http://seekingalpha.com/article/183901-friday-forecast-stop-the-week-we-want-to-get-off.

.

Here's his intro paragraph:

Boy, when sentiment shifts - it REALLY shifts!

Suddenly nothing is good enough for this market. A beat from Google (GOOG) send the stock plummeting, massive earnings at Goldman (GS) sent the stock lower even before Obama read them the riot act (now called the "Volcker Rule"). On the one hand, it's all an overreaction but, on the very large other hand, it's about freakin' time this market finally acted normally and pulled back a little because 10,700 was pretty irrational given the underlying fundamentals.

Next:

S&P 500 Now at Oversold Levels -- by Bespoke Investment Group, 1/23 at Seeking Alpha, http://seekingalpha.com/article/183955-s-p-500-now-at-oversold-levels. Interesting way they make their point (and I do tend to like Bespoke's analyses):

It took all of three days for the S&P 500 to move from 2 standard deviations above its 50-day moving average to 1 standard deviation below its 50-day moving average.

Will the Massachusetts election day not only mark a major turning point in Washington, but also a major turning point for the market? (Click to enlarge)