SPX Test of Critical Support at 1598

Let's notice that the cash S&P 500 Index (SPX) pressed to an intraday low so far at 1598.23, which is fully testing the lower support boundary of the bullish channel off of the Nov 2012 low (shown by the pink dotted line).

That is critical support and must contain further weakness to avert a potentially extremely-ugly downside extension that will point to the 1540-1530 area in a hurry.

That said, let's also notice that the SPX has traversed the width of the channel after initially overshooting by 2% the upper-channel boundary at 1652 prior to "reversing" back inside the channel.

A similar situation might be developing around the lower-channel line at 1598.

If current weakness pierces the lower boundary line by 1% to 2%, then the SPX could be heading for 1580-1566 prior to a sustained rally effort.

In either case, a break of 1598 is brought with risk, but so far, 1598 has contained the weakness.

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