As we spoke about in yesterdays post we were patiently waiting for a break of the trading range and although we were leaning bearish waiting for confirmation is always the prudent choice (or calling Ms Cleo). The trading range we experienced was clearly (ok now its clear) distribution and as we mentioned yesterday a larger decline would ensue and decline we did. As we also expected we saw a large increase in volume. Unfortunately, a large chunk of the decline happened on the gap down open (hate when they don't give the little guy a chance). The good news is that we know ahead of time where the decline may stop or at least pause should prices continue its drop. Below is the SPX PnF chart and we can see that 1653.4 is the next level of support. Additionally, we have the 50dma at 1656.74 (not shown) which is also a potential area of support. If and when we make that trip to support and not just any support but converging support (PnF support and moving average support) which is the best kind of support we will reassess. For those of you that are short try not to blow a decent trade for those of you that are long well...good luck.
Thanks for reading!