Saturday, October 24, 2009

Long Term Tech Talk

This market has come a long way from the bottom of the pit but it must hold above certain key levels. This process will take many weeks.Here is a comparison with the 2003 change in Trend.

Historically, Supercycle/Cycle bear markets in the US display the following characteristics:

1. They are three Wave structures, an ABC,

2. During the initial decline, wave A, the market loses about 50% of its value, or more;

3. The B wave rally is usually mistaken for a new bull market;

4. The B last anywhere between 23 months and 60 months.

The current Bear market started in Oct 2007, 24 months ago. During the initial decline, wave A, the SPX lost 58% of its value (1576-667). The current B wave rally (667-1101) is being lauded as a new bull market. Wave C of the three wave ABC bear market has yet to unfold.

During Primary wave A the market experienced a crash that lasted over a two week period. This occurred during the last week of Sept 08 and the first week of Oct 08. The mid-point of that crash occurred on friday Oct 3rd at SPX 1099. This week the SPX rallied right into that acceleration point and ran into resistance. All this technical evidence suggests Primary wave B may have ended on Oct 21st at SPX 1101.

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