During crazy market times like this I can talk my head off about fundamental issues that show the market is undervalued, but fundamentals don't matter right now. Stock prices are claims on future corporate profits forever? Who cares, earnings are going to be terrible in 2008, 2009, and maybe even 2010. Rather than trying to convince people (correctly) that earnings this year or next really don't have a material impact on a company's long term equity value, let's focus on what does seem to be working right now... technical analysis!

Long time readers of this blog know I don't use technical analysis because for a long term investor, charts don't tell us what stocks will do, earnings and valuations will. Still, technicals do work quite often in the short term because thousands of people are looking at the same thing and acting in the same way. Today was no exception, as the 10-yer S&P 500 chart below shows.

The 2002 closing low for the index was 776. Today we sank at the open, hit 776 and bounced significantly (818 as I write this). The long-term 2002 support level has held, which is crucial for the short term market environment. I might not care where the market trades today, next week, or next month, but a lot of people do.