LET'S LOOK AT THE S&P 500 DAILY CHART FIRST
For the past two weeks we have been looking at this consolidation forming at the "obvious" support and indicating this would start the final exhaustion phase of this leg down. This is not an unusual pattern for a bear trend. If this were a bull trend this congestion would be a low. But since one of our rules is; "the direction of the trend determines the significance of the pattern of trending." This could only set up as the consolidation before the last exhaustion move down. You can see how strong the trend had become with the huge space that had set up between the rally highs and the previous lows. There were also three descending trendlines which meant this trend could only end with a scary capitulation down.
LET'S LOOK AT THE LAST LEG DOWN IN THE 2002 BEAR CAMPAIGN
The pattern of trending is not exactly the same but you can see how the index developed three descending trendlines and fell out of a congestion into the final phase of the exhaustion or capitulation down. This trend is now in that phase but maybe only a few more day until it hits the price objective. If it can rally more than a day or two the exhaustion is compete. If I were making a comparison I'd say the index is currently about were the arrow is drawn.
NOW LET'S LOOK AT A MONTHLY CHART
The midpoint or 50% of the entire bull campaign is 1172. The high of the first leg up is 1163. Twenty five percent of the high price is 1180. And very important a ¼ extension of the range down is 1177. The low will come between 1180 and 1160 and within the next 2 to 6 days. It just needs to capitulate or exhaustion. If I'm wrong then around 1140, but this price zone between 1180 and 1160 should hold this leg. Two weeks ago on CNBC I drew on a chart how the remainder of the bear campaign will run out. After this exhaustion there will be a snap back rally and a large sideways pattern that will very likely run 60 to 90 days. The number of points to that rally should be between 90 and 120.
The timing for this current low will be 60 calendar days from high, 120 days from low and the numberious mid-July anniversary dates or multi-year cycles.