Worst week for the US stock market since September 2001

The Stock Market Week - 10/03/2008

As we had mentioned in our previous publications, the S&P 500 is now in sub wave three of the third down wave, which is considered the worse in the five-wave structure. The recent financial events appear to be the worse in the history of US financial market so far. "America's economy is facing unprecedented challenges," president Bush declared. It was the worst week for the US stock market since September 2001. All the major US indices were negative. For the week the Dow Jones Industrial Average dropped 817.75 points, or 7.34%. The Standard & Poor's 500 Index dropped 113.78 points, or 9.38%, while the Nasdaq Composite dropped 235.95 points, or 10.81%. The Consumer Staples sector was the strongest sector last week followed by the Health Care sector, while the Materials sector was the worst performing sector of the week followed by the Energy sector. The Consumer Staples is the most overvalued sector now, followed by Financial sector; while Tobacco Products Other, Regional-Mid-Atlantic Banks, and Dairy Products are the most overvalued industries. The Basic Materials is the most oversold sector, followed by Conglomerates sector, while Processing Systems/Prods, Metals Fabrication, and Aluminum industries are among the most oversold industries

Bear market statistics (19 during the last 100 years)

Description Average Current Worst Mildest Time from the end of one bear market to the beginning of the next 45.3 months 60 months N/A N/A Length of a bear market 18.5 months 12 months 47 month (ended in 1949) 2 month (ended in 1987) Bear market decline 36% 28% 89% (ended in 1932) 21% (ended in 1990)

Dow Jones Industrial Average Trend Analysis Dow Jones Industrial Average long-term chart has formed a head and shoulders pattern. The price retested the neckline and has resumed the long-term downtrend. The pattern should be close to completion, but the price did not reach the target yet. The sharp price drop moved daily William's Percentage Range (W%R) into oversold area, while weekly W%R is strongly oversold. The oversold W%R is usually considered as an early warning indicator that signals exhaustion of the sharp down trend and predicts that it may slow down and reverse soon.

Dow Jones Industrial Average - Long-Term Trend

Standard Poor's 500 Index Trend Analysis Standard & Poor's 500 Index is in a long-term down trend that started on 10/11/2007 at 1576.09. The chart is forming a falling channel pattern. The support line is around 1140. The third wave down is in progress now. It has started on 5/19/2008 and it is now forming a sub wave three down as well. According to this wave count, the S&P 500 is now in sub wave three of the third down wave. This sub wave is considered the worse in the five-wave structure. Daily Lane's Stochastic indicator is oversold, while daily and weekly William's Percentage Ranges are strongly oversold. Other technical indicators might be in oversold area soon. The sub wave three might be close to completion within several weeks.

Standard Poor's 500 - Long-Term Trend

Nasdaq Composite Index Trend Analysis The Nasdaq Composite index was in a long-term uptrend since 2002. As we suggested previously, the price was forming a symmetric triangle chart pattern. A triangle pattern usually represents an area of indecision, where the direction of the movement is questioned. In a mature trend a triangle chart pattern usually appears as a reversal formation. Recently the triangle pattern had a sharp breakdown with noticeable increase in volume. The price target for a triangle pattern is usually derived by measuring the distance between the starting high point of the ascending triangle with the starting low point of the triangle, which is then projected downward from the breakpoint.

Nasdaq Composite Index - Long-Term Trend

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