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We are definitely in a correction now.
The SPYs have broken the uptrend started in early March. Prices have fallen through the 10 day SMA and are using the 20 day SMA as downside support. Note that both SMAs still have an upside bias; they are still moiving higher. The 20 day SMA is at roughly the same level as prices establised in late January/early February.
Prices have moved though the 10, 20 and 200 day SMA. Also note the 10 day SMA is now turning lower and the 20 day SMA is making a similar move. The logical price target for this average is the line connectiing the two highs from earlier this year.
The IWMs have moved through the 10 and 20 day SMA are are now resting at technical support established earlier this year. Also note the 10 day SMA is now turning lower and the 20 day SMA is making a similar move.
The primary question to ask now is how severe will this correction be? Will it wipe out all the gains we've seen or just be a normal, say 10% correction? It's important to note there are a lot of areas of technical support on the way down which should help support the averages. Now, that says nothing for the fundamental situation -- or more specificically, the perception of the fundamentals.