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Chartology – S&P Hovering At New Lows

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

Symbol
Price
 
Change
%Change
S&P 500
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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

Symbol
Price
 
Change
%Change
S&P 500
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"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)