A Worrisome Crack in Support

The sharp drop in the markets on Wednesday is meaningful and disturbing. Just two days ago, I was saying we could see a rally to the upper part of the consolidation but then a return to and test of the support around 1395. Since then, we have seen both, plus we have seen a failure of the support. 

That is a very worrisome development, in that the 1395 level in the S&P 500 has been evident ever since August, when it was the bottom of a consolidation not unlike what we have seen in the last two weeks. I suggested that recent trading could have been the right shoulder of a large head-and-shoulders formation. Therefore, the break of that key level is a break of the neckline, and it points to a likely further slide, to perhaps as low as 1330....226 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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