S&P 500 Chart – September 12, 2008

The S&P 500 ($SPX.X) started last year with a blink by dipping below its few months of an upward trend.  That dip shows on my weekly price chart for the past three years of SPX.  That blink turned into a tick that kept coming back throughout the past year.  Finally, when we feel like shutting our eyes and just waiting until it’s all over there might be hope, at least in the short term again.  I have a few reasons to feel kind of bullish on the broader markets finally.

• The SPX is near the bottom of its trend line of lower lows that started nearly two years ago which happens to be just barely above the low of July. 
• Williams %R for the past 14 and 28 weeks is starting to move out of the oversold region.  That typically means a few good weeks ahead of us.
• VIX is up to the mid-20s again.  I’d like it to be above 30 for some real fear, but its better in the mid-20s than the sagging teens that it saw a few times in August.
• Unemployment hit 6.1% – Yes, that is higher than we’ve seen in a while, but keep in mind that the unemployment benefits period has been extended.  That means people who previously dropped off are still on there, inflating numbers slightly.  Making too much of a bullish argument about this would be tough.  I just don’t think that number is as bad as the headline.
• The SPX is close to a three year low.  Conditions have changed drastically to warrant this, but we are getting to the point where the downside risk isn’t going to outweigh the upside potential.  With such a large percentage of investors’ accounts sitting in cash, once the tide turns it could have better legs this time around.

Now, I’m not calling a bottom completely.  I just think the SPX is finally starting to wake from this financially induced sleep we fought from falling into.  We could be groggy for a while, but shouldn’t fall into a coma.

Analogy overkill?  It’s getting late and couldn’t help it.  I promise not to write this dribble all the time.  Good luck in the coming week.