Wednesday, November 12, 2008: The Stock Market as Represented by the S&P 500 Index went down 5.19% to close at 852.30.
Many people are concerned.
The most recent support area is 839.80 established on October 10, 2008. The S&P 500 could go down near this area and "test" support there.
The S&P 500 could successfully test and then bounce up.
Or, the S&P 500 could fail there, and go below 839.80.
Breaking below 839.80
If we break down below 839.80, the next major support was set on October 10, 2002, at 768.30. We could potentially reach there, and when we test, we could either bounce and form a very strong multi year double bottom (bullish), or we could break and fall much further down.
The Ten Year Chart Above shows the current S&P 500 value and the 6 year support of 768.30.
40 Year and 60 Year View
If we look at the longer term view, we notice that longer 40 year trend line from 1974 to 2008, shows that current support is around 800 on the S&P 500. The 40 Year Trend Line started around the major bottom of the great bear market of the early 1970s and continues today.
If we look at the 60 year chart since 1955, we notice a much lower support level of 400 on the S&P 500.
Watch the Tests
Let us observe how the stock market behaves at each major test point.
Today's Long Chart