On Friday, April 11, 2014, the S&P broke down below the 100-day moving average, the dashed yellow line in the chart below. It stopped at the 50% retracement level, 1816. with this break below the 100-day, the next target is 1800, which happens to be both the 61.8% retracement and the 150-day moving average. I would not be surprised to see this happen soon this coming week.
At that point, the markets will be extended to the downside, so a bounce would make sense. How high would that bounce be? I’m guessing something in the range of 1830 – 1860, which is essentially a 38.2% to 61.8% retracement. If that bounce fails, the next target is 1760, which is the 78.6% retracement and the 200-day moving average.
At this point, I think 1760 is a high probability. We would need good news to stop us from dropping to that level, in my opinion.
I am short the S&P.