Market Montage

It does look like we are experiencing the first real correction of the year.  If certain patterns fulfill technically there will be more downside to come.  However short term some short term indicators are flashing oversold and the S&P 500 is coming into some support areas in the 1538 – 1540 level.  Low this AM was 1541.  If bears can somehow just bust right through that without trouble, being this near term oversold it would be quite interesting.  That said, pressing here is a lower probability outcome as you get closer to one of those relief type rallies – dead cat or otherwise.

Stockcharts.com doesn't show the 23.6% retracement but it is 1538ish for those interested.  For the other major pullback levels (and remember a 38.2% retrace is still considered "healthy") see chart below.  [If needed, click on chart twice - on this page and next, for a larger view]

After about 15 minutes of battling at this major trend line we've been citing it finally broke and the results have been predictable since.

Yesterday's very sharp move up has been 100% reversed this morning as the Tuesday gap up just filled.  And with that dip buyers finally are being punished.  Once again the S&P 500 is at this major trendline support.  The more times you beat on a line like this, the more apt it is to finally break.  We'll see when/if it does.

Quite remarkable – each touch of this line leads to a very sharp bounce.   This is now twice in a 9 sessions it's hit it.

Yesterday was the worst session of the year…. for many reasons.

In stock terms the S&P 500 had its worst session of the entire rally from mid November in terms of breadth.   It was a total decimation yesterday – no place to hide. …