[caption id="attachment_806" align="aligncenter" width="500" caption="S&P 500 20-year"][/caption]
[caption id="attachment_805" align="aligncenter" width="500" caption="e-mini S&P"][/caption]
The 820 S&P 500 level was a major 10-year support. We broke that clean yesterday and passed the psychological 800 level. This is ugly to say the least. A target for this downmove is about 770, possibly 680 as indicated on Figure 1.
If we're to make a turnaround for a fail of this support test, a clean break of the upper trendline on Figure 2 today or tomorrow would be great news. With options expiration this Friday, volatility is going to be higher, so it will be hard to distinguish simple volatility, retracement, or real rebounds. I think the hourly trendline in Figure 2 is a good starting point as it has worked throughout the week in this down leg.
This isn't the end of the world by all account. Don't let fear or your hope for a rally impede your trading. This is as good as time as ever to remind yourself to watch the price action and make objective decisions.
I am not going to trade this crazy market for short term swings. Instead, I'll be looking for values and good price actions to position myself in this few days for the next few months.
: http://traderpau.files.wordpress.com/2008/11/2008-11-20-spx.png : http://traderpau.files.wordpress.com/2008/11/2008-11-20-es.png