The State of the Trend
You know that a market is in trouble, when it can't even muster a solid dead-cat bounce despite oversold market internals. Something we've been witnessing a lot lately with the SP500:
And if the recent past is any guide, there is a lot more selling to follow. This should come as no surprise as the European financial crisis continues to spin out of control.
From a weekly cycle perspective, however, there are still glimmers of hope. The composite weekly cycle is flatlining, since the longer-term cycles are still pointing up, while the shorter-term cycles are pointing down. If that doesn't change, the result should be a double bottom.* You can monitor these cycles yourself for any stock with the OddsTrader app:
Next weekly channel support is at 1145 and 1090.
In order to find a silver lining, one needs to dig deeper into longer-term, historical trends. Although the SP500 is lagging behind the pace of the 1994-2000 rally, it is still doing better than the 2002-2007 rally:
* See J. M. Hurst, The Profit Magic of Stock Transaction Timing, p. 57.