S&P 500 Outlook

Since Point #4 was reached in the S&P500 with a 1850.48 high Double Top that was confirmed on a close < 1812 and ultimately the 50 day moving average, this index has been in overall sell mode. Every bounce or green day has been aggressively sold, allowing fresh shorts to reload or any existing longs to exit at slightly better prices than the previous session. Ounce this index reached 1775 it proved to be a decent support level that the market desperately needed to hold but ultimately failed. Any rallies into this failure can be sold for a test of the 1730 level, which in my opinion is the next pit stop for this leg lower. Here I anticipate there to be responsive buyers present defending this area. This level is an old naked weekly high that was established last year and was never tested. < 1730 is when I get more concerned as there is no support till the last years naked October Island Reversal. This level is where I believe the market is headed in the short term and if we lost 1730 it could get there in a hurry. Important to note that the island is coincide ding with key market levels like 1665 is the 10% correction from the 1850.48 highs, along with point #5. A pullback in my opinion to this area seems logical and this area of confluence gives more confidence to begin initiating new longs in this market. All in all the markets have a few reasons to sell. #1 being the index was at the upper extreme of its range testing and building point #4. #2 was when the double top confirmed moving < 1812 and closing under the 50 day. And #3 was all the emerging markets (Turkey) nonsense along with a market that was up +30% last year. Keep open minded, be ready for anything and watch the 10% correction zone that will build point #5.