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Chartology - Is The Bottom In?

Stocks plunged again Tuesday in their fifth straight declining session as fears mounted that the spiraling credit crisis would drag the economy into a deep recession.

The slide capped the biggest five-day point loss ever for the Dow Jones Industrial Average. It has lost more than 1,400 points over the past five sessions, nearly 13 percent of its value.

When will the market finally start looking up again? Find out from Jeff deGraff, the #1 tech analyst on the Street! Following is a summary of his main points.

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S&P 500
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The total number of new companies making 52-week lows has reached 57% says deGraff. Usually when the number crosses 50% it signals a wash-out and you can begin to feel bullish.

Now here’s the rub. Although this analysis has been very reliable over the last 40 years you have to ask, is what’s happening now similar to trends we’ve send throughout the last 40 years? Or have the rules change too much. That’s still a big question mark.

Perhaps, a better indicator follows. Right now we’re 250 days into the bear market. Typically a bear market runs about 600 days. It’s not unusual for the first part of a decline to be the unwind from the preceding boom cycle. That suggests a second part of the decline lies ahead. That suggests we’re only in about the 5th inning of the downturn.

To see deGraff’s entire analysis please watch the video.

*Jeff deGraaf has been Institutional Investor magazine's top-ranked technical analyst for the past three years.


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