Typically, when every headline and TV show leads with market coverage -- whether it's passing a benchmark level on the upside or getting crunched on the downside -- the markets are close to some form of directional change.

For example, I logged on to AOL this morning to be greeted by the headline "Is there any hope?" Also, when I was watching the Sunday talk shows, I was stunned to hear Richard Grasso, chairman of the

New York Stock Exchange

, proclaim that historically, when Friday is very weak, Monday is likely to be a bad day. I wasn't stunned because he's wrong but because anyone who does interviews should know which quote will be carried for the rest of the day. That particular quote doesn't instill confidence in the system at the very time we need it.

Now that the market, as measured by any index, is making multiyear lows, when should the bleeding stop, and where can some form of recovery take place? Because very few indicators have worked in trying to call the proximity of the low, I had to pull out the big guns and go to the archives to find what has worked best during times of total uncertainty. I found the following information:


S&P 500

is now 22.5% below its 40-week (200-day) moving average. Since 1963, where my data begins, this index has been more than 15% below this moving average on only five other occasions. (See the table below.) The average decline below the long-term moving average those six times was 22.9%, with the worst case being 29.6% below in 1974. This means the index has roughly 7% risk from current levels.

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Anthony F. Dwyer is the chief market strategist of Kirlin Holding Corp. and managing director and chief market strategist of Kirlin Securities, its wholly owned broker-dealer subsidiary.

Kirlin Securities, Inc. ("The Firm") is a member of the National Association of Securities Dealers, Inc. and a registered U.S. Broker-Dealer. Reader are advised that this analysis report is issued solely for informational purposes and is not to be construed as an offer to sell or the solicitation of an offer to buy. This report does not have regard to the specific investment objectives, financial situation and the particular needs of any specific person who may receive this report. The information contained herein is based on sources that we believe to be reliable but is not guaranteed by us as being accurate and does not purport to be a complete statement or summary of the available data. Past performance is no guarantee of future results. Any opinions expressed herein are statements of our judgment as of the date of publication and are subject to change without notice. Reproduction without written permission is prohibited. Entities including but not limited to the Firm, its officers, directors, employees, customers, affiliates and Kirlin Holdings Corp. may have a position, long or short, in the securities referred to herein, and/or other related securities, and from time to time may increase or decrease such position or take a contra position. The Firm (or persons related thereto) may make a market in the securities mentioned herein, and may from time to time perform investment banking or other services for, or solicit investment banking or other business from, and may have other relationships with any company mentioned herein. Member NASD; SIPC.

Before joining Kirlin, he served as director of research and chief market strategist of Ladenburg Thalmann & Co. At time of publication, Dwyer had no positions in any of the securities mentioned in this column, although holdings can change at any time. He welcomes your feedback and invites you to send it to

Tony Dwyer.