I just realized after re reading my previous post that I am probably incorrect in saying the market has a chance of rallying higher rest of this week. I am changing my mind on that outlook and now believe while there may be a minor bounce higher tomorrow, it will likely be very weak and maybe sold off intraday at the close.
I expect a strong resumption of the down trend after tomorrow.
I have discovered a piece of market action from the market top in 2007 with a very similar indicator setup to what we have now.
It is basically telling me that the reversal we had on 5/17/2010 was likely only a one day head fake and not to be believed a having extended staying power.
Here is the chart:
So my new conclusion is that we will swing down again soon (starting this Wednesday?) and head for the target level of 1044.50 on the Sp500 as a bottoming point.