16 10 08 How Low Can It Go?
The sigh of relief which the world equity markets breathed earlier this week just became a gale force wind pushing prices back near last week's lows. Most technicians look at variants of bar charts or candle charts of various durations for guidance on market direction. Less so the point and figure chart and even rarer the percentage change point and figure chart. The beauty of pf charts are the clarity they bring by consolidating market movements. Below are a few charts we made at StockCharts.com tonight of both the Dow Jones Industrial Average as well as the S&P 500 index. Each box represents a move of 3 ⅓% and reversals occur when direction changes by three boxes (10%). The first two charts include the daily high and low to determine how many up (X) and down (O) boxes to draw. The latter charts use only the daily closing price and the change from day to day to calculate which, if any, boxes to draw.It looks to us that a break of DJIA 8100 again should see a test of 7500-7500 area (these days perhaps within hours). Looking at a longer dated chart, this is a very key level and provided support in 1997 and 1998. A break would open up significant more downside, with 5700-5800 looking to be the objective. Eeek! The serious break level in the S&P is about 790.
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