Tuesday, July 7, 2009

S&P: Lowest Close Since May 1st!

Today was the first major step towards a return of the bear trend. The market made an overnight high and immediately sold off once the morning session started. The technology stocks showed relative weakness all day and were the first to break to new lows. The financials, however, did show relative strength, and it won't be until they (XLF) breaks 11.20 that we will have an acceleration to the downside.

This first chart shows the big picture. While I currently have the waves labeled minor wave A and B with us currently in C, there is a more bearish alternate that I will bring up should one of two things happen:

(1) We put in a 5 wave move on the daily chart, or
(2) Wave C breaks 780, which means that the daily price action does not cross the 8 SMA before hitting 780.

Otherwise, I'm expect wave C to end somewhere between 815-840.

This second chart shows an up close view of the price action. Notice how price continues to respect the red zones I have put on the chart. Now in the third chart I have added a new zone, which is a key zone on the intraday charts. I expect price to find some key support in this zone but to eventually go through it.


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