Today I learned not to postpone my posts too long, as PG&E (power company) had a large outage, robbing me of the time to study charts and post. Since power just came back, I wanted to write at least a small post for next week. I may add more detail later during the week, sorry folks.
The S&P 500 has backed of the rising trend-line and the top of our support zone (grey bar). Invisible at this zoom level, the support level goes back to the April top (marked by the light blue horizontal line). This is also where we will intersect a second support line (red).
The first bounce on our blue line quickly reversed, and subsequent bounces were smaller yet again. This is usually a sign of weakness and an indication that the market intends to break through. The bottom of my grey shaded are is another strong area of support. This correction should not extend beyond the grey zone.
The relative performance of small caps has broken its steep (green) up-trend line, and has backed of the steeper blue downtrend line, which is also a sign of weakness. As I had stated in last weeks view, the signs of weakness are increasing. Watch the 1420 area for signs of reversal.