By Lawrence G. McMillan

The bears have a tight grasp on this market right now, which is a bit surprising since it is so late in the calendar year. Typically by this time, even in bear markets, there is something of a year- end rally.

New post-October lows were established this week when $SPX traded down to 2583 on Monday. That confirms that this is a bear market, in case you had any doubts.

By Lawrence G. McMillan

The action in the stock market is getting more volatile, at least in realized terms (implied volatility has not kept pace). The bottom line is that resistance at 2800-2820 has been reinforced, and similarly, support at 2580-2620 has been reinforced as well. The $SPX chart is bearish, in our opinion, as long as $SPX remains below 2820.

By Lawrence G. McMillan

There have been a number of positive developments in the past week or so: buy signals, oversold conditions producing rallies, and so forth. But the primary concern is how the $SPX chart looks, and it continues to look bearish. It is still in a downtrend, with heavy resistance at 2820. If that resistance were overcome, then our stance would change to a more positive one.

By Lawrence G. McMillan

The $SPX chart remains bearish. This week's action did not decline far enough to be a test of the October lows. The support area at 2580-2600 remains the bulls' best hope at the moment. If that gives way, then 2530 is the next stop. A violation of that area would be very negative.

By Lawrence G. McMillan

A break of support at 2580-2600 would likely augur for a retest of the February lows at 2530. A failure there, and the real bear market should unfold -- but perhaps not until early next year (December is normally a bullish month, even in bear markets).

Conversely, if $SPX were to climb above 2820, it would be a very bullish sign.

By Lawrence G. McMillan

This week saw the ninth biggest one-day point gain in the $SPX in history, as it rose 58.44 points on Wednesday. With that, $SPX had rallied over 200 points in a straight up manner, since the lows just six trading days prior (a time period which included our October Seasonal rally). That is the power of an oversold rally. It may surprise you to know that all of 10 largest point moves in history (by $SPX) have been completely reversed within a matter of days or a few weeks.

By Lawrence G. McMillan

Some very wide (and wild) swings have taken place in the market in the last week. Has this changed anything as far as the intermediate-term trend goes? Probably not, but it does show the power of an oversold rally.

One area that is now important as resistance is 2820 -- the top of the first rally a couple of weeks ago. If $SPX were to climb above there and move higher, that would be a much more bullish sign and could change the outlook considerably.

By Lawrence G. McMillan

Heavy selling continues to engulf the market on most days. The next support level appears to be roughly in the 2580-2600 area, which is the closing lows of February and April earlier this year.

There is resistance at 2820, which is where last week's oversold rally stalled out -- far short of even the most basic target: the declining 20-day moving average. Another resistance point now looms as well: the 200-day Moving Average.

By Lawrence G. McMillan

After two horrendous days on October 10th and 11th, the market experienced a solid oversold bounce. Some buy signals were even generated from that bounce, but now it seems to be failing again without having fulfilled even the most basic target of an oversold rally -- the declining 20-day moving average of $SPX. That may still happen, of course, but for now there is resistance at 2820 (the highs of this week). Support is at 2710.

By Lawrence G. McMillan

For the second time this year, the stock market has suffered a severe decline in an unusually short period of time. Declines like this used to take weeks, and now they occur in a couple of days. Nearly every indicator is now in some sort of oversold state, but "oversold does not mean buy." One must wait for confirmed buy signals, and even then the early ones are often stopped out in a market like this.