S&P 500 index (SPX) In Freefall Says Market Timer Frank Kollar

October 10, 2008 (FinancialWire) (By Frank Kollar)

If you are looking for a bottom for the stock market declines, you may have to look lower still.

The S&P 500 index (SPX) has lost some 42% since the SPX reached all-time highs back in October 2007. Where will the selling end?

As trend traders, we have been in bear funds, or cash, for most of 2008. We are not looking for the exact bottom as we only need to identify the trend. Currently it is down; when it reverses and rises it will be time to take bullish positions. Sound simple? It actually is.

But for those agonizing over when the market will finally bottom, here is some bad news. Our analysis of support and resistance says that when a support level is decisively broken, the next level will be reached eventually.

On Thursday, October 9, the SPX closed decisively below the 78.6% retracement of the entire advance since the bear market lows back in 2002-2003.

The next support level for the SPX is the prior bear market lows at about SPX 800. That is still 12% below current levels.

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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