Off the Charts

The market sold off sharply Thursday, one day after the Fed suggested it was prepared to decrease the pace of purchases within its controversial QE program. The S&P flashed a sell-signal yesterday afternoon around the 1640 area following the announcement, foreshadowing a potential move lower in today's session. Today, we saw a mass exodus from stocks as the indices posted their biggest daily losses of the year. The S&P was the weakest index, dropping 2.50%, while the Dow and Nasdaq fell 2.34% and 2.28%, respectively.

This morning we walked in to the S&P futures down 13 to 15 handles and opening around the 50-day moving average. As we stated in my Morning Note, though, I was not in any hurry to buy this dip. In technical analysis, the double bottom is a commonly referred-to pattern, but there is a reason that triple bottoms aren't mentioned much -- because they don't happen very often. The S&P accelerated lower after the open, and the result was obviously a day to take serious notice. The next stop for the index could be the 100-day moving average, at which point we will measure composure of the market once again....903 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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