Here is a daily chart of the Oil Service HOLDRs traded on the American Stock Exchange. The price of these depository receipts are highly correlated with crude oil prices.
On this chart I have drawn two sets of boxes.
The red lines depict the boxes which are controlling the drop from the all time high of 169.75 and are 29.45 points high. Notice how the market has been bouncing between the 1/3 and 2/3 division points of the red boxes (dotted lines) as opposed to the 1/2 division points.
The blue lines depict short term boxes drawn for the decline from the 150 top on August 2. These boxes are 16.72 points high.
The market is currently trading at the bottom of a blue box and at a 1/3 division point of a red box. I think OIH holdrs are headed up to 140 from here. Such a rally would be about the same size as the biggest previous rally we have seen on the way down from the all time high.
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