Tuesday, 3 March 2009

Targets for the Russell 2000 and S&P 500

As I indicated during a slot on CNBC's European Closing Bell last Friday the charts for the S&P 500 are not very instructive in attempting to pinpoint support levels now that we have broken on a weekly closing basis below the 740 area, so it might be more helpful to review other indices where there is clearer guidance.
The long term monthly chart for the Russell 2000 (RUT) shows that there is evidence of support in the region of 330/340 on this index which held during the corrections of 1998 and also of 2002/3. This would suggest about another eight to ten percent or so of downside and by rather simple extrapolation one could then propose a rough target of approximately 650 on the S&P 500.

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