A few days ago I noted that 120 was an important technical level. When prices moved below that level we needed to fine other technical levels where possible support might exist. So, here is a 7 year chart in weekly increments to locate technical support. Notice the following:
-- The 50% retracement level for the rally that lasted from '03 - '07 is above the current level. I've always used the 50% level as an approximate level -- meaning 118.231 is plus or minus a few points. So today's close at $116.59 is still close enough to the 118 level to be in the 50% retracement ballpark for me. However, another day like today and we've got major problems.
-- We have a fair amount of technical support around 115.
-- After 115 we've got 110 to look forward tool.
-- In a recent look at the markets I pointed out that the really long-term view of the SPYs is the 2007 peak was in fact the second top in a 10 year double top formation. Assuming that to be the technical case in combination where an economy clearly going into another fundamental downturn and we've got serious problems.
On the daily chart, notice the following:
-- All the SMAs are moving lower
-- The shorter SMAs are below the longer SMAs
-- Prices are below all the SMAs
Bottom line: this chart in combination with the multi-year chart and the underlying fundamentals indicates we've got serious problems.
