S&P 500--Monday morning, November 24, 2008
First the long term--a quarterly chart:
The market has traded down close to the gently sloped uptrend line formed from the 1982 and 1990 lows. Another more steeply sloped line joins the 1990 and 1995 lows. That line held in the bear market decline of 2000-2003, but was soundly broken in the current sell-off.
The region of the 2003 low and the low of last week is approximately a 61.8% retracement of the move from the 1990 low to the 2000 high. The next level down would be in the region of 550 to 600.
Now two shorter term patterns in the current move down.
First an impulsive move with an alpha low at 1200 and a beta high at 1313. The 4.236 delta is at 835. This pattern can be seen as having been completed in the panic sell-off of Friday, October 10.
But it was not the end of the decline.
There is a new pattern that can be seen with an alpha low at 845 and a beta high at 1007. The delta 1.618 target is around 745, basically the region of the lows on Thursday/Friday, November 20-21.
We have rallied off these lows, the initial rationale being the announcement that Geithner would be Secretary of the Treasury for Obama.
If the downtrend continues, the 2.618 delta target would be around 582, which would also coincide with the area of the next downward fibonacci support seen in relation to the long term bull move from 1982 to 2000.
