Where we are now...

The bounce is clear on this chart...What has me frankly puzzled is that I expect a wave 5 down after this bounce is over, and all of the lower trendlines are sloping up. So either we bust these trend lines like we did the older ones, or we don't make a lower low on the next decline, which I have a hard time believing...

You can see in the top image the bounce has caught up to one of the blue trendlines and stalled a bit, but I expect it to go higher...

Where is the rally likely to stop?

I have a simple formula for using indicator divergence to estimate price targets. Originally I experimented with a formula in a book by Connie Brown, but after a while I came up with a variant I believe works better. None of these methods are foolproof, but currently using daily Stochastics, I come up with a target of about 1545 for the $NDX, which is a .382 retrace of the whole decline so far...

Positive divergence builds on $NDX...

In conjunction with the most recent and promising Exponential chart posted Saturday (see below), this conventional chart is showing good positive divergence with the price action on Stochastics,and MACD looks ready to cross-over positively...

Also from 10/31/07 to 3/17/08 is 99 trading days, from 3/17/08 to 10/27/08 is 161 trading days. Very close to Fibonacci on time...that is, the duration of waves 2 and 3 combined is very close currently, to 1.618 times the duration of wave 1...

Note also that the height from wave 2 down to wave 3's termination is approaching a 1.618 ratio of wave 1, which occurs at a price of 1132.5...

$NDX after the bell Friday...

This chart in conjunction with the one posted earlier showing a .25 node, could mean the bottom is in..but be cautious, as there is still one set of trendlines a little lower, at just under 1100, that could also be the bottom....

Futures are sharply down...Here are premarket charts..

The exponential charts on the $NDX show possible resting points at just below 1150 and 1100..

Here are three important $NDX charts, about one hour before the open today on Friday the 24th...
Notice we are still at the .25 node on the top chart..A buy condition is usually when you are at a .25 node and one of the trendlines is touched and/or slightly exceeded.. That condition may be attained today..
If someone put a gun to my head, I would say the bottom chart will provide the lower bounds for this move. If anything does...!!!

Complex .25 Node bottom still forming on $NDX...

Up to date....

It may start to move up on or around the 28th, as that was a 1.0 node on a smaller scale, or perhaps the 31st. as the end of months have a bullish bias...

Notice that the $NYSI breadth indicator is (so far) still respecting, but at the bottom of, it's old channel, The $NASI (breadth indicator for the $NDX) has shot down clean through it. Anyway you look at it, the markets are extremely oversold, and we are entering the most favorable time of the year....

Market is very much at a pause...

This bottom that's forming is certainly struggling, it could be that nothing significant happens until after the election...There has been so little price movement the Exponential charts look barely changed on either axis....

On another note, check out this European website. They see U.S. Financial Armageddon by next summer:

http://www.leap2020.eu/GEAB-N-28-is-available!-Global-systemic-crisis-Alert-Summer-2009-The-US-government-defaults-on-its-debt_a2250.html

These two Bigchart's indicators coupled with a .25 Node are pretty strong together..

This bottom looks real...

1970's era political observation...

In Capitalism, Man exploits Man.

In Socialism, it's just the opposite.

Iceland's economy collapses - portent of the future?

It's been circulating on the internet that Iceland can't use it's currency to buy anything. They have about 5 weeks of food left. Without foreign infusions of "acceptable" capital, they're in deep doo-doo...

Here's the link:

http://www.bloomberg.com/apps/news?pid=20601109&sid=aVFtDRGwcc50&refer=home

This shows the extreme case of when a country's banks, and currency suddenly become untrustworthy. The currency still works internally, but not externally. Iceland being small, it is one of the first to succumb to the full effects of the credit crisis...They are self sufficient in energy (electricity is produced Geothermally, very advanced), seafood, some dairy and beef, but almost no grains or vegetables. So they won't freeze, but they could starve.

Many lessons here for the rest of the world, and a warning to us all...

Get prepared...



As a clue we may face a similar fate,

Reuters had this to say:
"Banks borrow record $437.5 billion per day from Fed"

http://www.reuters.com/article/newsOne/idUSTRE49F97920081016

Almost a half trillion borrowed by the banks in one day - does that seem sustainable to you?

Current chart looks basically the same as several days ago...

I was going to update the charts today, but since we are in the same approximate price point as on the 10th, the charts are really about the same. Today we sit exactly on the .25 node shown in the bottom $NDX chart of three trading days ago, which means the chart can be corrected one millimeter to the right. Everything else is the same. There is a chance that the $NDX could go down and tag that lower trendline I mentioned in that post, and do it within a couple of days of today (10/15/08), keeping it as a valid .25 node, since a little slop in timing is O.K.

Guess where we are now?

Many times people have said to me that the market drop from 2000 to 2002 was the analogue to the 1929 crash, and the rally from 2002 to 2007 was the bounce. That's wrong, because the time magnitudes are wrong. The crash WE JUST HAD is now the analogue to September of 1929, the rally we are starting now will be equivalent to the rally that ended in spring 1930, and the second, much longer, and more devastating decline will begin after the current rally ends. The full force of the Depression to follow will hold off until this second downleg makes it's appearance, and has run awhile.....

Another strange and dire situation caused by the credit crisis...

It looks as if things in the banking world don't get "fixed" soon, ocean-going ships with goods won't be able to unload in America's ports. This might include OIL. To understand this, and you should, check out this link:

http://www.marketoracle.co.uk/Article6745.html

Not only oil, but computers, TV sets, medical equipment, clothing, foreign cars, and anything else we don't make in the U.S.A., could disappear from our store shelves. But the most important of course, is oil.

The market is rallying now, confirming the .25 node I pointed out at the end of last week....

And here's the $NDX charts...

Same comments as below... AMAZING!

Notice the lower chart is near a .25 node...The date for that point is 10/15/08...if we don't get a bounce associated with this node, then I guess we go to ZERO. (I doubt that, really)

Notice the middle chart is approaching another lower trendline...does it hit that trendline on or near the 10/15/08 date that satisfies the lower chart, and then does a rally start? Could be, but no guarantees....

O.K. here is the $SPX charts with this morning's lows..

You can see I finally have the indexes matched up with new pivot points that work well, but no technical analysis in the world could have precisely predicted the drop of the last few weeks. The magnitude of this crash is amazing..

$SPX and $NDX have fallen to Quarterly Bollinger Bands

Pretty amazing how far it has fallen. This does look like a good place for a bounce because Bear market rallies often start in October.

$NDX with trendlines generated from new pivots..

Okay, experimentally, here are trendlines generated off of pivots that go back to the low of 2002..Let's see if they hold..looks like a bounce is possible based on this chart. On this set of new parameters, we are very close to a 1/8 node (.125) as you can see..we'll see what happens next...

Market below all trendlines

All of the markets are below current exponential trendlines. That means to find the new trendlines it is/will be following, new pivots will be chosen reflecting earlier and bigger patterns then the ones I have been using. This is a normal part of the process. The influence of the earlier pivots may still be felt, however. The $SPX has a 1.0 node on November 4th and the $SPX has a .75 node on 10/30/08 which are close enough dates to each other to bear watching. From a technical standpoint, the markets have fallen below their Bollinger Bands and could rally a bit here, but don't expect too much...

Mark L.

P.S. I see Carl Swenlin tracks a 9 month cycle and calculates a potential bottom around the 23rd or so...so the end of October to early November could be indeed be significant...I will try to find the next pivots and see what they say...

Where the markets are now...

$NDX in the top picture, $SPX in the bottom picture....as you can see the $NDX has really busted his trendlines...