The SP500 has moved decisively under the January 2010 high of 1150.45, and that level may become resistance on any rally attempt. Support is now at the 200dema around 1102. The Qs, on the other hand, are still above the January high and should find support at that level.
Our working hypothesis that we will new highs later this summer depends greatly on markets remaining above the February low. A breach of that level will destroy the potential for new rally highs this year, although not necessarily for next year. Also, we will be on the lookout for a 4th and 5th wave in the current decline, which could signal a change in the trend if the overall length of the decline is deep enough.
Hypotheses about future market outcomes can help us navigate the trend, but when the premises for those hyposthes are violated, we must be ready and willing to change our stance to accommodate the real market action. We may be nearing such a point now. We should know within the next few days.
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