LET'S LOOK AT THE S&P 500 DAILY CHART

Last week I indicated if this was the start of a bear trend the first leg down would be approximately 20% to 25% and take between 90 and 120 calendars days. Today's report doesn't change that probability, but I can refine that a bit because of the nature of the current short term trend. There has not been enough evidence to confirm a bear trend but I continue to believe that is the strongest probability. There has been a small congestion going down the past 7 trading day and yesterday rally should have been 90% of the retracement if the trend is to remain down hard.

Using the history of the past 110 years of trading there are two distinct probabilities that have developed. If this fast trend continues it will last to a minimum of August 21st through 24th and declining 14% to 18%. If there is going to be a secondary high there would still be another new low possibly to 1419 followed by a rally into the time window of September 3rd through 5th followed by a larger decline at a minimum 20%. If the trend is down those are two very high probabilities based upon the history of trading in both "price and time."

NOW LET'S LOOK AT A FTSE DAILY CHART

There are a number of items on this chart that are very interesting. As I pointed out in June the up trend from the May low was very weak. That is easily seen since every break to a new high, would immediately break back below the break out point. The strength of this trend or better said, the relative weakness compared to the CAC 40 or the DAX was obvious. That would make this index far more vulnerable to a fast move down if the trend changed to down. Markets don't play "catch up" this late in the game.

If you look at the distance between the current rally high and the previous support there is a large "space." This spacing means one of two things. The index either needs more time to consolidate the large move down since that space between those points is so large. Or it leaves the index vulnerable to a further fast move down because resistance has shown up at such a low level indicating sellers hitting bids as soon as they appear.

In June I said the dominate daily cycle for this index was 144 calendar days for important turns in this index. That left either the 27th of July or the 6th of August as the next important date. The weak style of trend led me to believe this would be low to high but from both lows 144 days has produced the last lows or the last two spikes down. I am assuming the 6th was the expiration of the cycle. Because of the spacing it could just produce a counter trend rally of one to four days. If it can exceeded 4 trading days then the index could rally 12 trading days because of the 144 cycle that came in as a low. The next two important dates, if this vibration in "time" remains, are September 10th and 22nd.