Technically, This is Where I Think the S&P Will Find Strong Support and a Final Resting Place
Technically, This is Where I Think the S&P Will Find Strong Support and a Final Resting Place by David Haggith for The Great Recession
Support The Daily Coin
This graph shows where my mind goes every time I ask myself how far the S&P 500 is likely to fall before it finds a solid bottom.
As you know, I don’t make predictions based on charts, but clearly there is intense convergence of longterm support around the 2,000 level and strong indication of a subliminal desire in the market to keep plumbing the bottom to find that depth.
Dave-Portnoy daydream traders notwithstanding, this is where the market’s undertow wants to pull it. I’m not saying it will get there, but that is the level at which the stock market would finally find substantial technical support and possibly economic convergence. The economy, at present, would strongly support stocks at that level … unless the economy falls further; then even that level could look overvalued.
Just one more chart
If the economy goes lower (more unemployment than where we now rest and continued decline in overall GDP (not GDP growth rate), here’s the next lower level and likely ultimate rock bottom. As you can see, the market’s longterm trend PRE-Fed rigging would support a slightly lower level as the maximum return to trend.
The strong support reflected in the first graph will probably prevent that from happening; but this would be the worse-case scenario, provided the earth doesn’t get hit by some greater natural castastrophe than what we have already seen. At the 1,500 level there is tremendous support, even without Fed interventions.
Of course, there is also the imaginary line one could draw straight across the bottoms of the last two recessions (S&P about 800); but we’ll leave that worst-case scenario for something like a major asteroid impact because those levels were established by where the market found proximate support from its PRE-FED trend line, busting slightly slightly below the line the last time but then recovering to bounce along that trend line for the next two years.
That’s all. Just a couple of snapshots this time of the possible paths ahead to keep in the back of your mind, which is where I keep them.