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S&P NOVEMBER LOWS TESTED Last week the Dow penetrated the November lows and it remained below them this week. During a week or tedious market action the S&P 500 tested its November lows on Monday and Friday, and each time the support held. This is somewhat encouraging, but you will notice that Friday's decline broke down from the short consolidation (reverse flag) formed the first four days of the week. This implies that the decline is not completed yet. Presently, the SPX has formed a double bottom. It is wide spaced and an excellent base from which to launch a medium-term rally; however, as far as we know the decline is not over yet. To paraphrase Moms Mabley, don't fall in love until the purse is open and the money showing.
I think it is time to take a look at gold. Like other commodities, it broke down from a parabolic top in 2008. Unlike other commodities, it found a bottom in October and has rallied through an important declining tops line, back to just below the level of all-time highs. It is so strong that it has decoupled from the dollar, meaning that it rallies even as the dollar advances. On the daily- and monthly-based charts I can make the case that gold could turn bearish very soon; however, gold is in a bull market, and we should expect bullish outcomes. There is also an unusually high demand for gold during this time of economic meltdown, and demand should increase if stock prices continue to erode.
Bottom Line: The S&P 500 has dropped below its 2002 lows for the second time since November. While the November lows are still holding, the 2002 lows are long-term in nature, and therefore more significant. I remain bearish until other evidence presents. Our timing model for gold is bullish, but because to the significant overhead resistance, my gut feels neutral. . . . . Hi Carl, I really enjoy your service and have for about nine years. Thank you for all your hard work and dedication. I was wondering if you could tell me the potential technical "bottom" numbers for the Dow, S&P 500, and Nasdaq? Thank you very much.
While I can't swear by these estimates, I don't think I'm sticking my neck out too far. Carl
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