Today is the day – the market officially tested the February 2010 lows in the Dow Jones and S&P 500, a very likely downside target that has been fulfilled.
The question is – will the market hold these levels or continue on through them? Whatever happens at these levels will set targets for the near future, so watch closely.
S&P 500:
The key level on the S&P 500 was 1,050, but officially 1,044 which was the February 2010 spike (intraday) low.
The market touched this level then rallied sharply off of it in the morning, but if the afternoon sees us break through the level and close under 1,040, it would likely be a game-changer.
Dow Jones:
The level to watch on the Dow Jones is 9,835, or 9,800 for a ’round number’ reference level.
Like the S&P 500, the Dow broke through the level slightly then recovered as bulls tried their hardest to support the market at this key level.
A close under 9,800 today could well be a game-changer for the market.
In terms of trend structure, both the S&P 500 and Dow Jones have…
1. Broken under the rising 20 and 50 day EMAs
2. The 20 and 50 EMAs have crossed in a “Death Cross”
3. Price has broken under the key rising 200 day SMA
And if price closes under these key levels – the February low – we would have an official classification of a downtrend by all objective measures.
Using the Martin Pring standard of measuring the “Weight of the Evidence,” a close under the February lows places a 10 ton weight on the bearish case.
Price would have formed a lower high (mid-May) then lower low (under February low). A downtrend is classified as a series of lower highs and lower lows.
Watch closely.
Corey Rosenbloom, CMT
Afraid to Trade.com
Follow Corey on Twitter: http://twitter.com/afraidtotrade
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