Week Compass

The week ahead shall probably determine the direction of the market for the remaining weeks of 2007. The DJI sits 540 points or 3.8% from it's all time highs. Whats more, it is only 337 points from closing above the October 31 high which would be a rejection of the October/November break. The bear camp has grown substantially in the last six weeks as the news of mortgage problems seemed to worsen. Other than the perennial bears, there is some genuine interest in the downside for the first time in years. Should the DJI make new highs this month, the bears will have to move their positions uncomfortably into 2008. This may prove to be a better bet as the current Fed activity will have played itself out, but shorts will be tired.