The pre-market futures are down substantially this morning, the most that we have seen in some time. Is this the beginning of a new downtrend? I don't think so. This is the sharp selloff event that I have been discussing as a possibility for this time period for the last month. Many will point to this event as an indication that the rally is over. However, there is a lot of technical damage that would have to be done to reach that conclusion, and we are no where near that point yet.
This week may be similar to Feb 27, 2007 with a large one or two day drop to support followed by a week of consolidation prior to a resumption of the uptrend. It has all of the earmarks of a c wave, a possiblity that we have already discussed. There is support in the Qs at 38.82, 37.96, 37.56 and 37.23. While the 3 week sell signal is at 38.87, the true 3 week net line sell signal is at 34.48 and the low of the high month is 34.30. In my view, any move below 38 is a buying opportunity. While a solid close below 37.23 would be a reason to exit.
Keep in mind that last week we just had the Golden Cross buy signal in the SP500. Quite frequently, a selloff occurs after this signal.
I will manage existing positions on their own merits without respect to opinions about the beginning of a selloff. This is no time to panic.