October 6th, 2008
In my September 17 post entitled “Where are Strongest Supporting Trendlines” I included the following chart:
This morning, the market hit the next to bottom trendline with an intra-day low, so far, of 1027.19 (the index is now at 104752). Here’s what the chart looks like today:
We will soon see a bounce, especially if the Fed puts in a rate cut? If you trace back to 2004 and 2001-02 you’ll see many pivot points off the trendline at the current level (by definition, not surprisingly that’s hope a trendline is drawn). Will the market fluctuate again between the current support and the higher one at 1120? Or will it slice through again as it did the immediately preceeding “supporting trendline”?
Too soon to say. But I think it’s a safe bet to say there will be one more wash-out move to the mid 900’s on the S&P. At least, I wouldn’t yet start calling it a recovery and putting money into what I thought were the new leaders.