Bear Market: More Downside Ahead

The major indexes crumbled below major support last week and this brings us to a new world of potential weakness ahead as this bear market continues with seemingly no end in sight.

Many analysts forecast a short term bounce, which of course is possible, but previously strong support at the Dow 8,000 level and S&P 500 800 level will now become a wall of resistance for a market attempting to climb to higher levels in the future.

The Dow has breached its November lows and the S&P 500 was one bar from doing the same last week.

In my work at Wall Street Sector Selector, I do a lot of work with Point and Figure charting, and the S&P 500 paints a clear but grim picture of the current market environment with the Double Bottom Breakdown on February 17th and the columns tracking well below the bearish resistance line.

And this chart also points out the significant wall of resistance that the index will face between 800 and 850 on its eventual way back up.

The scariest part of all of this is that next significant support on the major indexes goes all the way back to the mid 1990s. On the S&P chart below we can see that the next major line of support is at the 650 level in 1996-1997, a full 15% below where we stand today.

Continued>>> Charts at link.
http://seekingalpha.com/article/122099-bear-market-more-downside-ahead