Markets Confirm Downside Breakout

The S&P 500 closed lower on Wednesday and below the reaction low crossing at 884.30 confirming a downside breakout of a broad head and shoulder's top while opening the door for a larger degree decline during July. The low range close sets the stage for a steady to lower opening on Thursday. Stochastics and the RSI are bearish signaling that sideways to lower prices are possible near term.

If September extends this week's decline, the 38% retracement level of the March-June rally crossing at 845.09 is the next downside target. Closes above the 20 day moving average crossing at 906.62 are needed to confirm that a short term low has been posted.

First resistance is the 10 day moving average crossing at 901.53
Second resistance is the 20 day moving average crossing at 906.62

First support is today's low crossing at 865.50
Second support is the 38% retracement level crossing at 845.09

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The NASDAQ 100 closed lower on Wednesday as it extends last week's decline. The mid-range close sets the stage for a steady opening on Thursday. Stochastics and the RSI remain bearish signaling that sideways to lower prices are possible near term.

Today's close below support crossing at 1412.00 marked a downside breakout of this summer's trading range while opening the door for a possible test of the 38% retracement level of the March-June rally crossing at 1336.40 later this summer. Closes above the 20 day moving average crossing at 1453.65 would temper the near term bearish outlook in the market.

First resistance is the 20 day moving average crossing at 1453.65
Second resistance is last Wednesday's high crossing at 1496.25

First support is today's low crossing at 1392.50
Second support is the 38% retracement level at 1336.40

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