Where do we go from here
Last Wednesday (May 11th) we presented you with this article: The line in the sand... It was there we laid out what we would need to see in the market to determine a trend change. We had established that we were in an up trending market and needed a break below 1329 to indicate a market rollover. As of late, the market has been trapped in a sideways motion as it tried to find a direction. Since we didn't see an edge we have kept trading to a minimum and waited for the market to tell us what to do. Well today we saw a break below 1329 on the S&P 500.
Here's the Chart-Analysis on the S&P.
As you can see the SPX has pierced the 1329 support level creating a new lower-low. This move also confirms the lower-high established last week at 1359. From here it would be reasonable to assume the market will continue lower. We do have some support that could step it in terms of the 50 day moving average (purple line). However, any bounce play that does not take us above 1359 should be looked at as an opportunity to load up on short positions. Entering into long positions here would not be ideal as it would be contra-trend (against the trend). There will be levels in a downtrend to load up on longs and take advantage of bounce plays, but at this time it would be wiser to look for short positions.