Adam Hewison released a new update video on the S&P 500 this morning entitled “Has the S&P 500 Broken Final Support?” or alternately titled “Weekly Sell Triangle on S&P 500″.  I was impressed with how much Adam compressed in this brief 5-minute video!

(Image links to video page)

The chart I captured above shows where Adam is describing the long-term trendline originating from the March 2009 lows which was recently broken with closes to the downside (we’re beneath that as of this writing).

There’s another shorter term trendline that connects the three recent August, September, and October lows which also was broken at the same time as the longer trendline.

In addition to describing this trendline, Adam highlights key downside ‘targets’ or Fibonacci retracement prices to watch for possible support and describes the possibility of a short-term head and shoulders reversal pattern (in the event that we get one more swing up that fails to make a new high) and that that might mean.

He also sneaks in a discussion of the negative MACD divergence that I’ve also been showing as well.

He concludes the video by showing the recent “Trade Triangle” signal from the Market-Club software, which has triggered a weekly sell signal as of Monday.

I would suggest that 1,000 would be the “final” support level to watch because of the ‘psychological’ significance at that area, as well as the October support lows just above 1,000.  Still, the breakdown of two trendlines does not bode well for buyers.

The big question on everyone’s mind is whether or not this is “just another bear trap” or the beginning of a substantial (or even intermediate term) retracement.

Let’s keep a close eye on these levels and possibilities, particularly given that we have a Federal Reserve announcement on Wednesday and the “Jobs Report” on Friday.

Be safe.

Corey Rosenbloom, CMT
Afraid to Trade.com

Follow Corey on Twitter:  http://twitter.com/afraidtotrade

The link and chart are provided with permission as an affiliate member of Market Club.