S&P 500 Index (SPX) Breaks Multiple Support Levels Says Market Timer Frank Kollar
September 5, 2008 (FinancialWire) (By Frank Kollar)
Thursday’s market route took the S&P 500 Index (SPX) to closing lows that not only broke critical support levels, but also a rising trend support line.
When the SPX reached 1305.32 on August 11, it looked like the stock market was headed for considerably higher highs. But since that day, every rally attempt has reached lower highs before falling back.
A rising trend support line, connecting the closing lows from July 15 and August 25 was also broken decisively in Thursday’s trading. Over the past several weeks the SPX has also declined twice to around 1266 and reversed back to the upside. This support was broken on Thursday.
Lastly, the 50% and Fib 61.8% retracement support levels of the SPX rally from July 15 to August 11 were broken to the downside. The 61.8% level is considered critical support.
The CBOE Volatility Index (VIX) jumped higher, but with a close at 24.04 it has room to continue higher before reaching levels that typically indicate a bottom for the stock market. Those levels are above 30.00 and usually above 40.00.
While such strong selloffs are often followed by a bounce, we see lower lows ahead for the SPX. We also note that the Nasdaq 100 Index (NDX) closed on Thursday at a lower point than even the panic lows on July 15. Not exactly a good sign for the following weeks.
Kollar is editor and chief analyst at FibTimer.com (http://www.fibtimer.com) which offers market timing strategies for S&P and Nasdaq index fund traders, as well as bond, gold, small cap, sector, ETF and stock trading strategies.
Kollar’s research has shown that the financial markets are in tradable trends approximately 80 percent of the time. FibTimer strategies define trends and trade them in both advancing and declining markets. Caring nothing about what newscasters say or what the latest economic indicator predicts, trends are where the profits are, and that is where FibTimer is.
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