[PolicyCoon]

• While it is great to see this bounce in Equities, it is too early to be jumping up and down and sounding the all clear. While it has been a good bounce as yet it has not done something different. What do we mean?
• During the 2000-2002 bear market our first bounce was 14% followed by 4 bounces of 22 to 25% over 18 months before a trend low was posted in October 2002.
• The first 20%+ bounce came 12 months into the bear market compared to 13 months this time.
• The bounces between March 2001 and October 2002 averaged about 9 weeks.(Classic bear market bounces of 20%+ over relatively short period)
• Until may 2003 none of the bounces took out the high of the previous rally so we were continuing to set lower lows and lower highs (A classic trend as defined by Charles Dow)
• This time around the first bounce was again an early 14%. We followed that with 27% and the present bounce has been about 25% so far
• The Nov-Jan bounce was 7 weeks. This bounce so far has been 4 weeks.
• We have not yet had a bounce that takes out the high of a previous bear market rally.
• So what would make things look a bit better
• Firstly we need to get back over very good resistance in the 878-884 range (Channel top and similar percentage bounce as November 2008-Jan 2009. That would be promising.
• Much more promising would be a break back over the high of the last bounce at 944 thereby changing the dynamic of lower highs and lower lows. While this would not guarantee a trend change it would significantly brighten the prospects of such.
• On the other side what would concern?? A failure to do any of the above followed by a renewed weekly close below the 768-770 area would be ominous and suggest new lows are again a danger.