Today the market finally sold off. Selling accelerated toward the end of the day, ending the day quite oversold. We are approaching an area of strong support on the S&P500 near 1430, corresponding to the channel that has contained the rally since June 4 (except for a small shakeout) and corresponding to the consolidation area after the Draghi announcement.
Breaking through this area would be bearish. Any rally would be an opportunity to reduce risk.
I drew my trendlines on S&P500 above, since SPY went ex-dividend a couple of days ago, distorting the picture slightly. However, its daily volume chart shows us that this wasn’t a panic selloff yet. The increased volume and the candle that almost lacks any lower wick are bearish signs that could foreshadow a breakage of the support mentioned above.
The daily overbought indicators have been able to reset nicely with this move. This could propel us above the most recent top, should the market find buyers. Watch the support zone highlighted on the first chart !