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By Lawrence G. McMillan

Despite some position seasonality and oversold conditions, the bulls have not been able to gain a foothold, as the stock market has dropped sharply over the past three days.

The Standard & Poors 500 Index has fallen 50 points in that time. Actually, the back-and-forth process was working rather normally, as four consecutive days saw the market react in an opposite direction to the previous day. But then, on Tuesday morning, an early rally was stopped in its tracks by some negative commentary out of Europe. Then the real selling began after the FOMC meeting, which resulted in the Fed doing nothing different. Apparently, a large number of traders, or a number of large traders, had wanted some sort of stimulus to begin. When it didn’t selling accelerated. It also spilled over into the Gold market. Gold usually rises when governments run their printing presses, but since the Fed said there would be no printing, gold fell sharply today.

SPX has broken down below support at 1,220, and now the next support in at the bullish trend line that connects the October and November lows. That trend line is currently near 1,180, so this decline might continue on down towards that area. If that support should give way, then much lower downside targets would be activated. On the upside, the heavy resistance near the 200-day moving average (near 1,265) is still in force. A breakout over there would be quite bullish. Meanwhile, SPX remains volatile within the trading range.

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