Wednesday, October 05, 2005
The December S&P is on its way to support near the bottom of the red box at 1202.
On the updated hourly chart above this post you can see that the market today made a new low for the drop which began from the 1250 level. Moreover, the pace of the last phase of this drop (from the 1235 level) has been fast and only now is there any small upmove visible on this hourly chart. This reinforces the message box theory is sending us, namely that there is more to go on the downside. As the reaction low is established I expect to see some signs that the market is leveling out and that the pace of the decline is slowing.
The most obvious such indication will probably come from the daily count of the advancing issues on the New York Stock Exchange. This is the second chart above this post. Today the daily count (black line) is at new lows for the drops from 1250 and from 1235. On the day the low is made it is likely that the black line will be above whatever low it makes today. Moreover, we already see indications of a divergence in the 10 day moving average of this number (red line). It is not at new lows for the drop from 125o even though the S&P is at new lows, and I expect this divergence to continue into the 1202 low I am looking for.