The price move out of the 1151-1168 range occurred, price broke thru the 1151 level. This resulted in accelerated selling as expected with the SPX losing ten more handles. The 1150-1170 was an important support level and now it has failed.
The President spoke minutes ago and markets have moved down over the last hour. The German DAX is taking a toll on global markets since the bailouts of Italy and Spain may truly be too big to fail. If France and Germany help Italy and Spain out they set themselves up for a downgrade from AAA which will throw all Euro financing into chaos. This is weighing heavy on the markets today now that the DAX has dropped into a bear market as well with a drop in excess of 20% off its top.
Interestingly, the TRIN has dipped under 1.0 during the session, which actually favors bulls if you can believe that as the markets tumble. The selling is overdone, a lot of the damage is built in to the markets, but bulls are hesitant to step in to catch the falling knife. Caution is warranted to protect yourself in case of a sharp recovery rally. Thus, if short, no need to get greedy, and if not short, probably best to realize that you missed the move down and think of the market more in terms of what may be a play for the coming bounce.
Gold is climbing on the Euro woes. Keystone's 80-20 rule says typically when a price hits the 80 level it moves to the 20 level, thus, gold at 1680 opens the door to the 1720's, which we are basically there already. Oddly enough, weekly and daily charts for gold are negatively diverged across the board and want to see a spank down. However, the news wires rule the gold trade, and the Euro worries and now the DAX down over 20% gives traders lots to worry about.
Dow has lost the 11,000 level and now down 500 points. The SPX is testing the 1333 support level. SPX support is 1140, 1133, 1121, 1115, 1104.
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