The daily NDX completed the daily counts today as we have a SEQ and Combo 13. The SPX made a SEQ 13 today but has a COMBO 9 still waiting to be completed. What might happen now and is a frequent thing to see is the development of so-called intermarket divergence. On a global scale, this happens already as China is stronger than most other markets, for good reason. Hence, the NDX for example could start outperforming and the SPX is still falling as it should to 800 at least. The Rydex is far too high still but we had yesterday a extreme low reading for the ISEE index, which supports todays markets. We will see as the day goes what the dynamics are for a short-term low as we have not reached price levels which might attract buyers and definitely not my levels (capitulation).An alternative but still similar view from McLaren:
http://www.mclarenreport.net.au/articles/articles/196/1/November-12-2008-CNBC-POWERLUNCH-EUROPE/Page1.html
LET’S LOOK AT THE S&P 500 DAILY CHART
First let me say, there is an old saying in this business: “he who doesn’t change his mind will have no change to mind.” I have changed my mind. The previous target of 1115 or getting to 3/8 of the major range has changed; I said if the index had to re-test the low it would indicate a much weaker counter trend pattern of trend. The fact that the low had to be retested and now may come back for another test indicates this as a weak consolidation. So the index will be closer to the 1937 style of counter trend and likely only get marginally above the last high to 1024 or only 1//4 of the range. If it does start bouncing off the low the 4 test of support carries a high probability of going through support. The next leg could end the bear trend. The length of time could remain the same at 60 or 90 calendar days for the consolidation and if I am wrong it will be 45 calendar days to start a move down or near Nov 24th or the low won’t hold and the trend will continue. This has been a weaker rally than I had anticipated. The major problem is if this current run down tests the low because the tests are very close together and since the fourth test will go through support it is not leaving much time to rally and come back for a fourth test.
Only moving up to 3/8 of the last leg down keeps this leg intact and the trading since the October low has not been able to show any characteristics of trending upward. Again the normal intermediate counter trend is to see a V bottom and rally for 30 days and then distribute at a high level and resume the down trend in 60 or 90 days. This has been a strong pattern for low with 2 days up and 9 days down to successfully test the low but that style of counter trend that tests the lows usually doesn’t exceed ¼ of the major range down at 1024. Considering the magnitude of the October decline, this has been a weak rally so far. I have a cycle for low this weekend.
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