Tomorrow we will find out if it’’s safe to dip your investing toe back in the water for the short term.  Every so often we get an opportunity to really see market direction.  Viewing the chart below, you can clearly identify the market downtrend line (A) and uptrend line (B).  (A) and (B) are on course to intersect.  You could say this is a classic intersection of bulls and bears, uptrends and downtrends, where the prevailing short term direction of the market will be determined by which line breaks the ceiling or floor.  Does the market rally to 10,500, or does the market fall another leg down to 6,800?

We will know tomorrow, when either the floor or ceiling has broken.

For those wishing they sold at Dow 10,000, you may well have your chance to recover some funds on the rally back to 10,500 should the Dow break through it’’s ceiling of 8,600 tomorrow.  Should the Dow fall through it’’s floor of 8,350 tomorrow, you will have to cut your losses and sell immediately, as they Dow will move down to it’’s next leg of 6,800.

This market is unlike any we”ve seen in our lifetimes.  The last time you could identify a chart performance like the past year’’s DJIA, you have to go back to 1929.  Should the ceiling break tomorrow, you can expect the rally to fill the gap left at 10,400 on the Dow and turn south at about 10,500.  Accordingly, don”t get too comfortable on the rally up.  Once again my advice is to sell into this rally, which should last into mid-January 2009, should the ceiling break tomorrow, 12/5/08.  Should the market fall through it’’s floor, it’’s tissue paper only for Christmas. Head for the exits asap.

Tomorrow, December 5/2008 is decision day for the short term direction of the stock market.

…