We are overdue for a bounce, but it is safe to assume that sellers remain in control unless we take out the ONH at 4448.50. Use caution on early trades as the open is very close to the settlement and overnight inventory is very balanced. I usually prefer to wait for the market to settle in before I trade in the circumstances.
Any movement below the RTH Low should target the 50-day line at 4413. The 50-day line should offer strong support initially, even if we are starting a larger correction. Failure to do so would potentially be a longer-term bearish signal.
My best guess is that we find support on the 50-day line, flip back higher, then put in a second leg down into the 80-day cycle low in a week. The second leg could be a double bottom but is more likely than not to take us lower to put some fear into the bulls.
Don’t forget the blow-off scenario mentioned yesterday if we make a quick move to 4600.
A.F. Thornton