Previously we had discussed the key support of 2,085 on the S&P500, and 208.78 on the SPY ETF, which was broken on Friday. Then prices tested resistance and confirmed the bear breakdown during Monday’s session. Prices have broken the level that divided the bull and bear scenarios, and so it’s now resistance.
Tuesday’s drop through the new trend’s base channel (blue) support made the case for an impulsive decline. Please, be alert with your short positions though. We are at a very early stage of the bear phase where rallies will be wild and high against the budding down trend, especially after reaching the current decline’s optimum target at SPX 2,026. Anyway, until the January low is taken out, we have no evidence of a large multi-month degree sell-off.
Amidst the correction of this first bear leg, the previously mentioned SPX resistance of 2,085 will be very easily attainable over the course of the next two weeks.
The time zone we reference on our charts is Pacific Standard Time. Therefore, the U.S. cash market opens at 6:30 AM PST and closes at 1:00 PM PST.