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Chartology: When Will Market Stabilize?

Think this is the bottom? You’re not alone. A widely followed tech analyst doesn’t think the market will get much worse.

According to Asbury Research technical analyst John Kosar this 11-year low in the S&P 500 should be a point of support - in other words stocks should bounce off it.

"The latest data continue to suggest that an extended decline from here is unlikely without at least a appreciable, 1-2 month corrective rebound first," wrote Kosar, President of Asbury research in Chicago, in a note to clients.

If this looks familiar it’s because Fast Money Series Producer John Melloy first wrote about Kosar's note in his blog. And just like Melloy promised we were so intrigued that we invited Kosar onto the show to defend his position.

Following is a summary of his main points.

Symbol
Price
 
Change
%Change
S&P 500
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Conclusion: Patterns in the S&P suggest that two weekly closes below 768 are necessary to confirm a breakdown, says Kosar. The 740-732 support level appears to be the most important.

Conclusion: Because technology has led the broad market both higher and lower during the past decade, how the SOX responds to these levels may be a leading indication of whether underlying support levels hold in the SPX and DJIA.

Conclusion: The energy sector looks washed out here from a sentiment standpoint. At the same time, the crude oil contract is testing long term support around $40. Technical conditions seem to be pretty good for December out performance vs the S&P 500 to continue through Q1 and potentially into Q2.

To see John Kosar's complete analysis please watch the video.


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Trader disclosure: On Feb. 25th, 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) Put Spread; Najarian Owns (DNA) Calls; Najarian Owns (FCX) & (FCX) Calls; Najarian Owns (GDX) & (GDX) Short Calls; Najarian Owns (HPQ) Calls; Najarian Owns (MSFT); Najarian Owns (MS) & (MS) Short Calls; Najarian Owns (X) Put Spread; Najarian Owns (WFC) & (WFC) Calls; Karabell Owns (AAPL), (BHP), (FCX), (GOOG), (GLD), (JPM); Macke Owns (MS), (TM), (SDS), (DIS); Finerman Owns (RIG), (DAI); Finerman's Firm Owns (DNA), (MSFT), (RIG); Finerman's Firm Is Short (IYR), (IJR), (IWM), (MDY), (SPY), (USO); Finerman's Firm Is Short (BBT); Finerman's Firm Owns (WFC) Preferred

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