Today, Tomorrow, and the Next

• After putting in 2 doji candles on Monday and Tuesday, the S&P sold off today down to 1335.
• StockTock is calling for a bounce higher tomorrow for a number of reasons.
  • The S&P is oversold and due for a bounce. In 5 trading days, the S&P has fallen 70 points from top to bottom, a 5% move.
  • The S&P closed right at its low of the session, often a bullish indicator.
  • 1335 is a mathematical support level. Prior range was 35 points from 1405 to 1370. We have fallen 35 points from 1370 to 1335.
• The 1370 support level has been broken and will now serve as resistance.
• The 1327 level should serve as support if the market gaps lower or sells off near the open tomorrow. 1327 is a 61.8% Fibonacci retracement level.
• 1347 may also come into play as it served as resistance today.
• This is currently a day trader’s market, allowing for quick trades as the market moves up and down.

Over the Next Week or Two

• The market is in a correction and still has some more downside over the next week or two.
• The market may bottom out around the 1327/1330 level. 1327 is a 61.8% retracement.
• The market is being led lower by financials. Several brokers and banks cannot catch a bid (LEH, MER, WB, C). Concerns over more writedowns and capital raising have returned. The next shoe to drop may come out of Europe, as some European banks are acting very sick (UBS, DB, BCS). The markets will not bottom until some catalyst causes capitulation in the financial sector.

After That

• It is too early to identify when the correction will end, but a late June / early July turn date may setup for nice summer rally, which will likely be led by technology shares.
• This rally will fulfill a WV pattern on the weekly SPX chart.
• There is still a chance that the WV pattern cracks and takes the market to new lows. This would require some type of financial shock to the economy.

The Market Outlook changes each day as the charts fill out and provide more clarity.