Click for a larger image
Some very important technical developments occurred yesterday.
1.) Since the end of November, the SPYs have been in an upward sloping trend channel. Yesterday prices fell through the lower support line of that channel.
2.) Starting in early October, there was a downward sloping trend line that acted like the top of a triangle consolidation pattern. Prices broke through this trend line a little over a week ago. Prices broke back through this line yesterday.
3.) While the RSI has been trending higher for the last few months, it is now at a technically important level
4.) Prices have fallen through all the SMAs over the last few trading days.
It looks as though prices want to test the lower 80s levels again. Considering Alcoa's announcement yesterday to kick off the earnings season along with the announcement that banks will announce their first quarterly loss since 1990 a retesting of lows makes sense right now.
