How long will will the market hover at these lows?
For insights we turn to one of the most esteemed market technicians working today, Oppenheimer’s Carter Worth.
CHART #1: S&P 500 20 YEARS
Worth tell us that patterns in the stock market tend to repeat themselves. "History has shown that there is proportionality -- that there must be time spent that's in relation to the prior time, at a past reference point -- high or low."
In other words we spent about 6 months at the top and we spent about 7 months at the 2002-03 lows. There is a presumption that we will spend about the same amount of time at this junction. And we've already been here for the better part of 4 months.
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CHART #2: S&P 500 1 YEAR
"I think the seminal moment in this market was the 5-day drop from October 5 to 10. That’s the biggest 5-day decline ever," he explains. The patterns immediately following suggest to Worth that we could be in a stabilizing pattern – not a drop and break pattern.
“You’ve got to be off your shorts,” he counsels. “Selectively buy into weakness and play relative strength.”
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CHART #3: BERKSHIRE HATHAWAY 1 YEAR
Berkshire is great proxy for this market, he says. It's in the center of the storm as a financial, it has exposure to big marquis names which are being beaten down and it has exposure to materials through the railroads.
“I would use Berkshire as a control mechanism for the whole market. If Berkshire holds it’s 52- week low so will the market and if it doesn’t the market won’t either.”
To see Carter Worth's complete analysis please watch the video.
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Trader disclosure: On Feb. 23rd, 2008, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders Najarian Owns (GE) Puts; Najarian Owns (GDX) & (GDX) Short Calls; Najarian Owns (HPQ) Calls; Najarian Owns (MSFT) & (MSFT) Short Calls; Najarian Owns (MS) & (MS) Short Calls; Najarian Owns (X) Put Spread; Najarian Owns (WFC) & (WFC) Calls; Seymour Owns (AA), (BAC), (EEM), (FXI); Seymour Is Short (NUE); Seymour's Firm Owns (PCU); Adami Owns (AGU), (BTU), (C), (GS), (INTC), (MSFT), (NUE); Finerman's Firm Owns (WFC) Preferred; Finerman's Firm Owns (MSFT), (RIG); Finerman's Firm Is Short (IYR), (IJR), (MDX), (SPY), (BBT), (VNO)
