We resumed the downtrend in the cash S&P500 yesterday as the bulls succumbed to the selling pressure. The index has now lost touch with the long moving average (green on the chart). This price action indicates that the correction (I have it labeled as wave four (iv’)) from Monday’s low is over.Price action has now met all the targets mentioned Wednesday, and now stands at another important Fibonacci level: 61.8% of the move from January 23 to May 19. There is also another important cluster nearby at 1331; and, with a possible five waves down from June 5 completing we should now look for a bounce. Longer-term, the downward move from the May 19 high is not over.
As a change of pace I have added two Tom DeMark indicators to the chart today. Both indicate that we should be looking for a potential bottom here – the first time this has happened since the March low.
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