The S&P 500 still has more on the downside to take out its lows at 1265 basis the futures contract, but it seems inevitable that it will.
As I stated, there is a silver lining to all of this and that is the fact that the first leg down is very close to completion. This will afford us the luxury of getting our equity allocation up from 50% to 85-95% for the always lucrative first bear market rally.
The first rally after the initial leg down in a bear market will appear to be a new leg upward and should begin to curb the massive bearish sentiment we currently have. We also should retrace at the very least 50% of the first decline, if not 62% to 79%. This translates into a move of 17%, 20% and 26% respectively. We look for the bleeding to stop on the NASDAQ in the 2160-2120 area.
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