Before we can establish where we are going we have to agree on where we have been and where we are now.  That excersize will establish the trend that we are currently in.  The stock market, as measured by the S&P 500 peaked in price at about 1570 in early Oct '07.  The S&P 500 has been setting a series of lower highs since then. Volume peaked in Jan '08 has has been declining since then.  Money Flow into the S&P 500 peaked in April of '07 and has been trending down since then.  Currently there is more money flowing out of the S&P on a daily basis, than there is coming in, creating a negative money flow situation. 

The above paragraph clearly establishs that we are in a bear market with the intermediate term trend in prices being down.  This is confirmed by the trends in volume and money flow.

By using a technique called the Measured Move Theory, we can use the above data to make an informed projection of where we are going and how long it will take to get there.  The theory states that each leg down and subsequent rally will be of approximate equal length and duration.  We also know that all groups in nature come in odd numbers [Fibonacci circa 1200???].  Consequently since we have begun the 2nd leg down, we know that we will enjoy at least 3 legs down in this bear market.  It could be 5 or 7, but it will not be 2 or 4 or 6.

The last leg down was about 300 S&P points and took about 6 months to complete. The subsequent rally was about 200 points and took about 3 months to complete.  By applying the above data to the Measured Move Theory we can see that the current leg down will carry us to the 1150 level on the S&P 500 and should be complete in late Oct or early Nov.  We will then have a rally of about 200 points to 1350 which should put us just into the new year.  The 3rd leg down will take us to about 1000 on the S&P by early summer of '09.  We should then enjoy a summer rally.  A 4th and 5th legs down are difficult to predict at this point, but you can see how the theory works.  I always like to confirm my prognostications before I tell anyone about them so I did check a long term chart to see if the projected levels coinside with previously established support/resistance lines and yes, they do.

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