Here we stil on the proverbial edge of the cliff - S&P 880 is a very big support. I would not be surprised to see this level hold one last time, but we have tested it too many times and eventually the market forces win. The long term trend still points down and eventually the long term trend wins. If we see a good break here, it will be time to sell the market short. Our first stop should be the 840 area, so my probable scenario if it breaks is as follows:
- We break 880 and we fall to the 840-845 area where a 3880day counter rally occurs back to the 880 level
- Any advance back above 880 soon fails and the market resumes falling down to the 800 level.
- Again the counter rally will ensue and return us to the 820 area and then will will slide to a temporary holding area around 770.
- Total slide should take 3-4 weeks
As a trader, we love volatility and there will be multiple waves to this move if we see an initial break from 880. Otherwise I fear that we will become entangled in a very unprofitable and trendless market. Long term charts point to the resumption in the move down, and at this point, there is little upside to this market, My prognosis is a move to 770, but I leave also believe that this could be the very nasty final move down to S&P 550.