We've pierced that line 4-5 times, but never after two rate cuts, so I think it's a very important line here. I'll use 2388, last week's low, using the monthly closes (first link below). Since it needs to break by 2% on a closing basis, that actually gives us until 2340, but I wouldn't be too pleased by even a small piercing unless buyers came in right away. The problem with those levels, though, is we don't get a negated rally attempt unless we close below 2291, so we have a lot of opportunities to bottom between 2291-2388, IMHO. Lower than 2291 on a closing basis, and I think those who called for much lower lows will be right.
However, look at the action off the January lows, and you see we are forming a trendline that now has three touches on it (second link below). That tells me 2402 is a support with a high probability of holding; this is how trendlines form, buyers who missed previous lows keep coming in at higher prices. So 2402 (give or take a point) is my early warning; it's also a support I expect will hold, given Friday's declining volume. That also gives us a whole range of possible supports from 2291-2402; it's going to be tough to set new lows with everything in this range, IMHO.
Finally, as I said last year, I don't see how you can measure a tech bear market using OEX measures (VIX, PC ratio). Take a look at the new VXN, the NDX-based volatility indicator (third link); the level of fear among NDX traders exceeded the October 1998 low. By a lot. People calling for a final capitulation need to take a look at that indicator and the historical reaction of the market after two Fed rate cuts, as measured by the 1990 COMPX log trendline.
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