When last we left the Purple Crayon, the S&P 500 was trying to hold 1,340, oil was in danger of breaking down, silver was dead and gold was iffy.
Fast forward one week, and we've had some rather harrowing chart developments. We've got a decent amount of ground to cover, so let's cut to the chase and take a firm look at the present and a vague glimpse into the future through the magic of the chart!
* The S&P 500 support level of 1,340 I discussed last week is broken. As crayon devotees know, I use a thick line to avoid confusing a slight support break with an actual trend change. S&P 1,340 was the support I was watching. I wasn't alone. It seems everyone and their dog was watching 1,340 based on both anecdotal evidence and the excessive trading within 5 or 10 points of the "magic" number over the last two weeks.
On Monday, the S&P closed in the 1,320's. No rationalization, no tears and no regrets -- support is broken on the broader market. That doesn't mean the end of the world, but it does mean my trading viewpoint is now one of selling rallies. Buying dips is a strategy for uptrends. We're not in an uptrend anymore.Read More »from The Purple Crayon: Flashing a Yellow Light