In an update last week we noted that the 200 SMA was critical to hold and we’d have to wait to see what happens as Street Schemers tried like heck to keep the SPY above it.  We noted that the new week might reveal what’s next.  Now we know:

Not holding the 200 SMA resulted in instantly strong selling.  Not holding the recent low could ratchet up the fear and create panic:

In summary, the downside break of the Rising Wedge that we’ve tracked for quite a while is still wreaking havoc on the markets technically.  Clearly, there are news drivers, as there almost always are, and yields continuing to climb may be chief among them along with earnings concerns but we can’t be certain.  Regardless, sticking with the charts, a little more weakness could trigger even more fulfillment to the downside courtesy of the Rising Wedge measured move projection.

We went cautious and prudent some time ago and currently believe it is too early to abandon that status.

Thanks,

Wayne