We’ve had back-to-back 80% upside days on the NYSE, which could well mark a major bottom, per the award-winning work of Paul Desmond of Lowry Research.
It’s worth noting that the 2002 bottom formed the same way — except that this one could turn out to be stronger because it was preceded by a half-dozen 90% downside days, the most since 1974.
Coming as it does off a very important support level, the longer-term implications for the economy are better than they might otherwise be.
So where from here? We’ve rallied 1,000 points in two days on the Dow (first chart below), so some manner of pause or pullback seems almost a given here. 11,250-11,282 is first support; much below that and we could fill today’s gap at 11,019. To the upside, clearing 11,750-11,867 is essential to get back above the 2000 peak and to break the pattern of lower highs. 11,483-11,550 is first resistance.
The S&P (second chart) faces resistance at 1265, 1280, 1304 and 1313, and first support is 1233-1237.
The Nasdaq (third chart) faces resistance at 2313, 2347-2450 and 2386, and support is 2239.
Paul Shread is a Chartered Market Technician (CMT) and member of the Market Technicians Association.
