S&P 500 Could Break 1996 Lows-Minyanville

S&P 500 Could Break 1996 Lows

Kevin A. Tuttle Nov 20, 2008 10:30 am


		If 770 is breached, the drop could be sickening.

Well, we cut bait, and will look for another time to put back in.

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With yesterdays move, the SPX index is now down over 48% from the October 2007 peak and down over 30%, just in the 4th quarter of 2008 alone. Over 30% in less than 7 weeks -- almost 17% in October and another 17% in November -- who would have thought?

During yesterday’s calamity, and my firm's change of stance, the immediate question arose: “Where do we put back in?”

The answer is twofold. First is patience. The last time the market broke a support, at the end of the third quarter, the market continued to drop for 7 days without reprieve. We first have to see where the chips fall. If selling begets selling, which is typical, then the exacerbation could drop the market another 12% to 20% from here.

Second, and more importantly, the 2003 lows are at 770 on the SPX; if these are broken, and the next support can’t even be pulled up on a 5-year chart, they will be levels from 1997 and 1996 (11 or 12 years ago).

Possibilities lie, if 770 is breached - down to 600.

Wow, it hurts to even say that.

As I've said before, I won't hesitate to pull the ripcord and return to a defensive stance - which is what I did, and I stand by my firm's analysis.

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11-20-2008, 11:11 am
777 on the S&P 7777 on the dow held so far and the culprits of all the problems, the house builders are one of the sector risers, as well as retailers, pretty amazing that! but the oils aren't joining in, get them i Read More


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