A move below $SPX 1140 would be very negative

By Lawrence G. McMillan

Today’s stock market action is very much like last Friday’s.  There is heavy selling, and it doesn’t appear that buyers have much desire to buy before the weekend.  Last week, there was a rally attempt at 3pm (Eastern time), but it eventually failed, and prices closed on the low of the day.  If you’ll recall, last week the selling continued on into the afternoon of the first trading day of the next week, before a strong rally surfaced.  That could well be the case again this week.

As you know, we have pointed on the “pennant” on the $SPX chart, and have warned that a violation of the downside of the channel would be quite bearish.  $SPX is pretty much sitting right on that lower band of the channel right now.  A move below 1140 would be very negative, and would cause us to be quite negative.

We have talked about how Wednesday’s “90% up day” would have to be countered by a sharp down day.  Well, yesterday and today certainly qualify in that regard.  Right now, declining volume outnumbers advancing volume by nearly a 40-to-1 ratio!!  It will certainly be a “90% down volume day” if not a true “90% down day.”   The good news about that is...

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