The global markets seem to be selling off at a good rate, and the U.S. futures are down big. This could be an important day.
There is an updated $SPX (S&P 500 Index) chart above.
I expect some sort of a bottom at around 1437, which is the 61.8% retracement of the most recent year long run. This also coincides with horizontal support at around 1437-1440, so this would be a good support area. This might be a final capitulation.
Many different indicators such as the number of S&P 500 stocks above 50 day moving average are very low (18% right now), which suggests we are at, or near, at least a medium term bottom.
I then expect a bounce to the 50% to 38.2% retracement area from 1459 to 1482. 1482 might more likely target.
Since V-bottoms are not stable, I expect the market to re-test its lows of around 1437. At that point, $SPX could:
1. Form a double bottom as support holds.
2. Start a new leg down, which would be bearish.
The market may move very quickly and hit 1437 intraday, and even work its way close to the 50% retracement of 1459 all within a day.
This scenario is very similar to a scenario I came up with on June 7, 2007.
The June 7, 2007 Possible ABC Correction Scenario.
Today's Chart
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