Take a close look at all of the charts below. Notice they all crossed through their upward slanting support line today. Now -- that brings us to what exactly is a trend violation. For example, if you look at each of the charts below it's possible to draw an upward sloping trend line which current price action has already violated. So -- when is a trend cross a real trend cross and when is it a simple sell-off?
Like most answers, it really depends. In his book on technical analysis, Pring uses a 3% violation as the amount of the violation in order for it to be a "real" trend break. I think that's a good rule of thumb. I would also add that the lack of volume on today's sell-off makes it a bit suspect.
But adding to the argument is today's trading was a 4% whack from the SPYs perspective which is a pretty serious chopping. And then there are strong fundamental reasons for today's sell-off -- namely that there are still some serious problems with the economy which won't be resolved anytime soon.
While one data point (today's trading) is hardly a strong enough point to hang your hat on, the lack of fundamental confirmation adds to my suspicions that we are at the beginning of a sell-off.
But let me add -- the market likes to make an ass out of me whenever possible.
