The next hurdle to the downside for the S&P 500 (SPX) is to break the clustered TDST levels as defined by the 15 minute, 30 minute, and 2 hour charts. They are clustered around 1683 and a break underneath will expose more downside risks. The 4 hour chart is on bar 3 and as long as it not interrupted prior to reaching a 9 bar count, the bearish picture stays. The SPX daily chart should easily produce a bearish price flip today.On the Brasil iShares ETF (EWZ), it is upon a 9 count TD Buy Setup. Today’s bar 8 has already ‘perfected’ the count by undercutting bar 6 and 7’s low. It is also occurring above the TDST support level at 41.82. This sets up another long setup but it needs to break above 45.39 prior to completing a 9 count TD Sell Setup before a sustainable rally can ensue for EWZ.
The risks to the markets to the downside are growing but the initial leg is always the hardest to judge since no downside trend has been established. What I did notice yesterday was the break under SPX 1700 was barely defended at all. This is giving me an indication that the big money players are not seeing value in the market. Market breadth as indicated by the McClellan oscillator was so poor when the market was nearing the top that they are are already in the negative. I suspect the markets are going to consolidate the last three down days but the bearish outlook still stands. (updated intraday)