The technical picture has changed

By Lawrence G. McMillan

A major support level has finally given way.  With $SPX falling below 1430, a lot of selling was unleashed into the market.  Rally attempts were made, but without much success.  As a result, the technical picture has changed, although it could still be considered neutral rather than bearish, at least to some impartial observers.  However, with the penetration of the 1430 level, not only was support broken, but so was the bullish trend line that extended back to the June lows.  Only the fact that there is support in the 1395 area (the August lows) keeps this from being a completely bearish $SPX chart at this time.  If that level (1395) is breached, then more dire downside prospects can be considered.  Overnight, S&P futures are up 7 points in Globex trading.  There should now be resistance in the 1425-1430 area.

Equity-only put-call ratios continue to race higher and thus remain on sell signals.  They have been persistently bearish for a couple of weeks – slightly prematurely perhaps, but accurate eventually nonetheless...

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