Sorry!! The article you are trying to read is not available now.
Thank you very much;
you're only a step away from
downloading your reports.

Mauled by Cyclical Bear?


Any countertrend rally likely to meet resistance.


After witnessing the aftermath of yesterday's political catastrophe, it's important to capture the next potential market support levels. In Crystal Ball, my firm referenced a 10-year chart of the S&P 500 and unequivocally stated:

"It's our humble opinion that the 1,150 to 1,160 area for the S&P 500 is crucial to any kind of bullish stance. It's imperative that the line drawn in the sand holds right here on a closing basis.

If, on a closing basis, the market fails at this level -- for whatever reason and God forbid -- look out below. The next level of support in the S&P 500 is 1,045."
Minyanville's Why Wall Street Will Never Be the Same
The market's roughly 9% grievous day yesterday, as you well know, broke the 10-year support level discussed and puts the SPX off 30% from the October 11th high, down 25% YTD. The next support to be found goes back 4 years, to September 2004, around 1,045.

Click to enlarge

As my firm discussed in Opportunity?, you should be aware of days like yesterday when searching for a bottom. By looking at the secondary contrarian indicators one can plainly see the sheer panic in the markets: "Lemmings" or selling begets selling. The VIX spiked to its highest level since the 2003 market bottom, the put call ratio reached 1.24, the advance/decline line was 1 to 6.5 and the ARMS Index (TRIN) spiked over 9 intra day.

With the weight of evidence put together, along with yesterday's action, my firm will be very cautiously looking for a point of entrance for a short-term rebound in the markets. However, to be absolutely clear, our stance is that we continue to be in a bear market and a countertrend rally is more than likely to be met with resistance at the downward sloping cyclical bear trend.

Click to enlarge

< Previous
  • 1
Next >
No positions in stocks mentioned,

The information on this website solely= reflects the analysis of or opinion about the performance of securities an= d financial markets by the writers whose articles appear on the site. The v= iews expressed by the writers are not necessarily the views of Minyanville = Media, Inc. or members of its management. Nothing contained on the website = is intended to constitute a recommendation or advice addressed to an indivi= dual investor or category of investors to purchase, sell or hold any securi= ty, or to take any action with respect to the prospective movement of the s= ecurities markets or to solicit the purchase or sale of any security. Any i= nvestment decisions must be made by the reader either individually or in co= nsultation with his or her investment professional. Minyanville writers and= staff may trade or hold positions in securities that are discussed in arti= cles appearing on the website. Writers of articles are required to disclose= whether they have a position in any stock or fund discussed in an article,= but are not permitted to disclose the size or direction of the position. N= othing on this website is intended to solicit business of any kind for a wr= iter's business or fund. Minyanville management and staff as well as co= ntributing writers will not respond to emails or other communications reque= sting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.



Featured Videos