The market has now closed lower 3 weeks in a row which last occurred back in June. The Dow which had been holding support at its 10 Week EMA (blue line) has now broken solidly below it. At this time it appears the next major support area would be near 9750 which corresponds to its 40 Week EMA (green line) and 23.6% Retrace from the March 2009 low to the most recent high.
As for the Nasdaq it has now broken well below its 10 Week EMA (blue line) and the next major support level appears to be in the 2075 to 2060 range which corresponds to its 23.6% Retrace calculated from the March 2009 low to the most recent high and its 40 Week EMA (green line).
The S&P 500 has also broken below its 10 Week EMA (blue line) and its next major support area appears to be in the 1040 to 1045 range which corresponds to its 40 Week EMA and 23.6% Retrace calculated from the March 2009 low to its most recent high.
Meanwhile despite the recent correction there still hasn't been an excessive amount of panic yet as the 5 Day Average of the Put to Call Ratio (blue line) still hasn't reached the 1.0 level (black line). Notice since the March 2009 low each time the 5 Day Average of the Put to Call Ratio has reached the 1.0 level (points A) this was followed by a substantial rally (points B to C). Thus although the market is very oversold and could bounce at any time we could see more downside after any oversold bounce occurs.
Finally I know some of you follow wave analysis as I get quite a few emails about it. Keep in mind you can come up with totally different counts by comparing a non inflation adjusted chart to one that is inflation adjusted. Today I will just focus on a regular chart that everyone is accustomed to seeing. One can certainly make the argument that the entire move from the mid 1970's through 2007 was a completed 5 Wave affair. Meanwhile the move down from late 2007 through early 2009 was an A Wave of a developing ABC corrective pattern while the recent rally from the March 2009 low is a B Wave which may have completed. If that is the case then we are in the early stages of a developing C Wave.
By definition a C Wave can be equal to the length of Wave A or just be 61.8% of Wave A. Let's say that the recent high in the Dow of 10730 was the peak of Wave B. Wave A had a length of 7728 points (14198-6470) and 61.8% of that is 4776 points. Thus if Wave C were to equal Wave A then 10730-7728 = 3002. Meanwhile if Wave C were equal to 61.8% of Wave A then 10730-4776 = 5954.
Now as I have talked about in the past there is a longer term upward trend line (black line) connecting the 1932 low with the 1982 low which would come into play near 6000 if Wave C turns into an elongated affair much like we saw back in the late 1930's and early 1940's.
Market Data 
Markets 
AI
