S&P

This chart shows that we are in wave C [or is it 3] down. What is important in the short term is that yesterday's selling in the US appears as wave v of C down and on the S&P the target of V=I is near 1864, where we may start expecting the first snap back bounce from this 5 wave decline. If we are in wave 3 of a bear market then this is the first wave of selling and we bounce back to retrace up to the 20dma or 61.8% near the 2000 mark. However if this 5 wave decline is wave C as I discussed on the Transports yesterday then this should mark a more meaningful bottom for a while.

What this does also is bring us closer to this neckline of a potential h&s neckline on the S&P index as well. If the next bounce from this 5 wave decline is unable to get past retracements then the H&S is a real threat and would signal the onset of a larger degree bear market for the US.

The S&P has had a lot in favor of repeating the patterns of the past in starting a bear market. Like the sell in monthly momentum since the start of the year, but it has taken a long time. Previous bear markets were confirmed by breaks of a rising trendline along with the 40 month exponential moving average [green line], and momentum falling below zero. This month momentum does fall below zero and the 40mema is at 1849. The rising trendline from 2009 would be at 1790.