Wall Street Still Searching For A Bottom

Most traders believe there is going to be at least one other retest of of the October lows of about 840 on the S&P 500, but when and how do we know if that bottom might hold? A number of traders are looking for simple, classic technical signals.

Here's one: retesting lows on improving internals. A number of traders noted that when we hit the lows on the S&P 500 in the middle of October, new 52-week lows spiked to levels never seen. But when we got close again to another low on the S&P, on October 24th, new lows had dropped off dramatically.

So, for example, if we go back to 840 on the S&P, and new lows are again at fairly low levels, that would be a good sign that we might hold there.

The "next leg down" argument. Bears argue that we will hit the old lows, and pass them. The bear argument is the "next leg down." The next down leg is a dramatic spike in auto loan and credit card delinquencies.

The bulls argue that this information has been widely telegraphed on the Street already. Regardless, this argues for a retest sooner than later.

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