WHERE ARE WE NOW?

That's a good question: where ARE we now? My answer: I have no idea! Could we rebound in a few weeks? Sure, but can we also drop another 20% in the market? Absolutely! My purpose here is not to "guess" where the market is going, but rather provide the highest likely direction based on technicals.

Below are 5-year charts of the DJIA, S&P 500, and NASDAQ. The purple lines (or hot pink if you want to be funny) are the major support and resistance lines. As you get lower on the chart, these areas are critical for the market. The blue lines indicate the head-and-shoulders which most of us should already be aware of.


This first chart is of the DJIA. We are nearing the 10,000 level. This is one of the major support levels hat must not be broken! IF it is broken, we could see 9,000 or lower. That's no joke. The DJIA must hold the 10,000 level. Notice how we started the 3rd primary bear leg for the DJIA.


This second chart (above) is of the S&P 500. The critical area is 1,050, or between the 2 support lines I drew. We should see a nice bounce, but the market is in free fall right now, and I cannot say that the 1,050 level will hold. This is the last remaining support level before we go sub-1,000. The S&P 500 is also on it's 3rd leg down.

The NASDAQ has been doing quite well due to fact that the NASDAQ is not financial-heavy. If you absolutely must buy or are forced to go long, pick NASDAQ stocks. The next support level is at 1,750. At this level, I do expect some neutral consolidation. The difference between the NASDAQ and the other 2 indices is that the NASDAQ is actually in its 2nd primary leg.

Examples of Primary Legs (Red) and Reaction/Secondary Rallies (Green):